Forms to finance the creation of a business

15 January 2009 - 17:46

We see next the different forms that we must to finance the creation of a new business, that is to say, the different forms that we must to secure money to invest in the creation or beginning of a business:

To use equity capital

The form most common to finance the creation of a new business is using equity capital, that is to say, making use of the money that we pruned to have, or obtaining it of our savings, or any other personal source like, for example, making use of the credit cards, selling active personal, etc.

This type of financing is most recommendable since we are not forced to pay interests nor to have to give back the money.

A business is always recommendable when initiating, using equity capital, at least in the stage of the creation, and already more ahead, when the business begins to grow, just to begin to look for outsourcing of financing.

If embargo, when our equity capital is not sufficient, is possible to combine this one with other types of financing that we will see next.

Relatives

If we did not tell on sufficient equity capital, a good alternative to finance the creation of a business is to ask given money relatives, which is very probable that they accept if they are conscientious of our capacity and responsibility.

The advantage of this type of financing, is that we are generally not forced to pay interests (although by our account, as soon as they begin to have utilities, we can economically repay the deposited confidence to them in us) nor are forced to have to give back the money so quickly, which allows us to work calmly in the creation of our new business, without being pressed to have to so quickly give back to the money and in a date limit.

Friendships

An alternative to ask money relatives is the one to ask for money to friendly. The usual thing in this case is that the time of term for the return of the money is smaller. The disadvantage of this form to secure financing is that we can aggravate the friendship in case we did not prune to give back the money given in the decided term.

Banks

Another form of financing for the creation of a business, is to ask for money given to the bank.

This type of financing is somewhat complicated to accede, since the banks usually grant credits only to businesses in march and with certain experience in the market, and not to businesses that just begin.

Nevertheless, to accede on a banking credit to initiate a new business is not impossible, if we counted on good credit reputation, good commercial references, or an attractive idea of business with a solid plan of businesses endorses that it.

Other financial organizations

An alternative form of financing to the banks is to ask for a credit to other financial organizations that are oriented to support to the small one and median company.

Some of them are accessible to accede on a credit for the creation of a business, but equal as in the previous case, our idea of business must be attractive and to be endorsed by the elaboration of a good plan of businesses.

The disadvantage of this type of financing is that, unlike the traditional banks, in these financial organizations the given amount is small, and the cost of the loan (interest rate) elevated.

It investigates in your locality by these financial organizations.

Partners

This form of financing implies to look for a person who wants to share the risk of the creation of the business, and to invest along with us.

The recommendable thing is to look for a partner with the same motivations and aspirations that we.

The recommendable thing also, is to look for a partner who invests the same capital that we, and that contribute, besides the money, other resources that are complementary to that we own like, for example, experience in some aspect of the business, knowledge of the market, knowledge of commercial contacts, etc.

The disadvantage to have a partner is that more ahead it can have discords, disputes, differences, etc., mainly if the business begins not to achieve the awaited objectives.

Investors

To look for an investor implies to look for a person who wants to finance the total or a part of the investment of the business, and that consequently will receive a percentage of the utilities according to the contributed thing.

The disadvantage to make use of this type of financing, is that we must fight with the fact to have to always pay a part of the utilities of the business, to which invested initially and that soon did not make more create or let grow the business.

Contests

It consists of participating in contests on projects of business elaborated by governmental organisms, universities or other means, where it is awarded to the best idea of business, with the total or partial financing of the project.

If accounts with an attractive and innovating idea of business, investigate on the existence of this type of contests in your locality.

Labels: Creation of businesses, Finances

Compártelo

Related contents:

1. How to finance the creation of a company
2. Myths on the creation of businesses or companies
3. Advice before initiating a business
4. Like beginning a little capital business with or budget
5. 30 forms to make money in Internet