Business Angels For Your Startup Business

Business Angels For Your Startup Business

Setting up a​ new business can be a​ daunting prospect. There’s the​ possibility of​ failure,​ and with it,​ the​ risk of​ losing the​ money you’ve invested in​ your company,​ as​ well as​ seeing all your months or​ even years of​ hard work go to​ waste. But,​ there’s truth in​ the​ old saying,​ “nothing ventured,​ nothing gained.” the​ biggest rewards accrue to​ those who not only have a​ vision for their business,​ but also are prepared to​ see it​ through and have the​ courage of​ their convictions.

Nonetheless,​ it​ can be hard finding sources of​ funding for a​ new business. in​ many cases,​ finding a​ business angel may be your best bet for sourcing capital to​ start up a​ new company. But,​ let’s have a​ look at​ some of​ the​ other options available to​ you.

First and most obvious,​ you may have the​ available funds yourself. Depending on​ the​ level of​ risk,​ you may not feel comfortable dipping into your savings to​ fund a​ new business; this is​ a​ decision you will have to​ consider long and hard. However,​ if​ you feel able to​ use some of​ your savings to​ finance a​ startup,​ then so much the​ better.

Another option is​ to​ borrow money from family or​ friends. if​ you’re doing this,​ the​ best and fairest way to​ get them on​ board is​ as​ investors,​ making sure that they have the​ chance to​ share in​ your success – but also warning them of​ the​ potential pitfalls. Make sure they are clear on​ the​ nature of​ the​ risk they are undertaking – many friendships have been broken down the​ years due to​ money. It’s often a​ good idea to​ put your agreement in​ writing,​ just so there is​ absolutely no misunderstanding further down the​ line about the​ terms on​ which you borrowed the​ money. It’s up to​ you to​ be honest about your chances of​ success and to​ give them all the​ information they need.

The second major type of​ financing is​ acquired by taking out a​ standard loan. This may be from your bank or​ another lender,​ and can include bank loans,​ overdraft facilities,​ or​ credit cards. Taking out one or​ several loans is​ not a​ bad idea,​ but you must make sure you’re not taking on​ more debt than you can afford to​ repay.

Take a​ careful look at​ repayment terms and interest rates,​ and make sure you’re getting the​ best possible deal before signing anything. Even if​ your fledgling business is​ doing well,​ excessive loan repayments can be a​ heavy drag on​ your profits,​ so do the​ sums beforehand,​ and make sure you can afford to​ repay the​ debt even in​ a​ worst-case scenario. You might also want to​ think about remortgaging your house,​ or​ other investment properties you may own. the​ same rules apply; make sure you don’t take on​ more debt than you can afford to​ repay. Taking out a​ large loan or​ remortgage can force you to​ make an​ honest appraisal of​ your business plan; sometimes it​ can be just the​ reality check you need.

If you don’t have any equity with which to​ take out a​ loan,​ then there is​ another option,​ called the​ Small Business Loan Guarantee scheme; it’s a​ business loan 75% guaranteed by the​ Government. You are required to​ contribute just 25% of​ the​ security,​ so this is​ an​ excellent option for anyone who doesn’t have a​ huge amount of​ capital with which to​ set up their small business. However,​ it’s worth noting that these loans do have an​ administration fee attached,​ and the​ rate of​ interest is​ normally relatively high – some 1.5 to​ 2.0% higher than base rate.

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