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Finance

How to Finance Your Own Business

Owning your own business is a dream for a lot of people. You get to work for yourself, manage your own time, your own employees, your own policies, and more. Entrepreneurship is growing and there’s good reason for it. However, you can have all the business savvy you need when running your business but if you don’t know how to fund that business, you will never get off the ground. Need a little info on how to finance your own business? Let’s look at 7 ways to do that.

Small Business Loan

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If you have a smart business plan, you have strong financials, and you can present all of this to a financial institution in a way that makes them feel confident in the success of your business, you can find a strong financial backer in this kind of lender.

Credit Card

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Choosing to finance your business with a credit card can be risky. The interest charged on credit cards is usually a lot higher than with loans, and the penalties for late or missed payments is a lot higher than with a loan. However, this is a way to finance your own business.

Look at Retirement Accounts

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If you have a 401(k) or pension from a previous job, you may be able to use it to fund your next adventure. Make sure to look at the terms of the borrowing loan and how it will affect future retirement.

Crowdfunding

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Sites like Kickstarter have grown quite a bit because of the popularity of crowdfunding. You usually have to have a specific project or product idea in mind for it to be funded. However, you can get friends, family, and even strangers to donate to your idea or business in exchange for “thank you’s” at different tiers of donations.

Angel Investors

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Attracting an angel investor can be tricky. Not many people are willing to invest in a business, especially a start-up, unless they feel strongly about its success. If you can put together a winning proposal with strong business and marketing plans, you are on your way to getting yourself an angel investor.

Microloan

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These types of loans are smaller than traditional small business loans so traditional financial institutions don’t bother lending them. Usually it is non-profits that offer microloans and the rules for getting them are much less strict than small business loans. Finding the right one for you can be a bit tricky since there are so many available, but once you do it can lead to business growth which can then set you up for a traditional small business loan.

Family & Friends

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No one wants to see you succeed more than your family and friends, so why not turn to them to help you fund your start-up? You might not come up across one person with enough means to get you up and running but between everyone, you might just be able to get moving.

Financing your own business can be the hardest part of starting your own company, whether it is a sole-proprietorship or a full-on corporation. Most businesses start small so these smaller ways to finance it work well. Try combining several ways to get the cash you need.

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