4 Ways Young Upstarts Can Secure Finance
No matter how good or promising your young upstart business is, without the required time, skills, knowledge and equipment, it is unlikely to ever really get off the ground. Although founders can often bring a lot of these to the table, finding and securing funding is often required to fill any gaps in the resources required for success.
But what options are available to young upstarts and which one is best given your unique situation? In this article we answer these questions, highlighting 4 of the most common ways to secure finance and when they are best used.
1. Traditional Loan.
Getting a traditional business bank loan is often the go-to option for upstart businesses. As banks are generally known as being well established, they are viewed as a safe way to secure finance for an upstart.
A bank loan can be a good option when you know exactly when you will need the money and how much will you need. For example, these can offer competitive funding for purchasing assets like vehicles, computers or office equipment. Bank loans can offer competitive interest rates and a predictable payback model.
However, traditional bank loans can take a considerable amount of time to be approved and for the money to be deposited into your account. This can mean that they aren’t a good option for immediate and unforeseen costs.
For those with a poor or limited credit history, bank loans can also be very difficult to secure.
2. Payday Loan.
Payday loans have been subject to bad press in recent years. But when understood and used correctly, they can be a good way to secure finance in some upstart situations.
The concept behind a payday loan means that approval and transfer rates tend to be incredibly quick. Due to the often smaller nature of the loan, lenders are also less likely to be concerned about limited or poor credit history, leading to high acceptance rates.
A payday loan can be a great way for an upstart to quickly and easily meet costs or cover the funding needed for key business opportunities. As interest rates can be high, always check them before taking out a payday loan and ensure that you can make the repayments required.
Crowdfunding platforms like Kickstarter are becoming an increasingly popular way to raise funding for young upstart businesses. The very nature of these platforms also helps you test the viability of the business by putting your idea out to the world, allowing people to show their support by donating money.
Using crowdfunding is also a smart way to build an initial customer base, as those who invest usually receive some sort of exclusive product or service rather than physically seeing their money back.
Although this is arguably a great way to raise business finance, crowdfunding is usually a slow and unpredictable process.
4. Private Investors.
Approaching private investors is another common way to raise the required finance for your upstart business. This approach works well for those that need to access cash as well as wanting the benefits of connected and experienced investors.
However, this approach is not for everyone. Working with private investors often puts stress on the business owner to drive growth and profit. This can often take the business in a different direction, ultimately detracting from the overall mission and vision of the founder.
There are many options available for young upstarts to secure funding. Each option has several negative and positive impacts which must be considered. This guide will help you find the right option for your situation and put you in the best position to achieve upstart success.
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