Getting to finance a company is one of the most important challenges that entrepreneurs face, regardless of whether it is a business that they are starting or one that has already been operating for a few years. Because in a business you have to invest constantly, and this implies, in most cases, having to seek financial help from third parties.
Do you know how you can finance your venture beyond the classic bank loan? Today we are going to explain several alternatives that will help you get the capital you need.
Using your own capital to finance a company
Using your own capital to cover the money needs of a business is quite common when you are starting a business. But this alternative is only viable if you have some savings that you can dedicate to your project.
If you are receiving unemployment benefits, you can capitalize the unemployment benefit and collect all your remaining benefits at once. This way you get some more extra money to put into your business.
Friends, Family & Fools
The famous Anglo-Saxon three “F” system is very useful when financing a company. It’s about borrowing money from people around you.
The good thing is that they will surely not charge you interest or it will be very low. In addition, you have greater flexibility when it comes to returning the money.
In the case of Pepe, when he decided to start a business he did not know the three “F” system as such, but he did know that his brother-in-law was in a position to help him. So he did not hesitate and asked him for the 3,000 euros he needed to constitute the initial capital of a Limited Liability Company. A year later, Pepe was finally able to return all the money to his brother-in-law.
Loans between family and friends are a good option, but if you use this form of financing, remember to sign a contract. This way you can prove to the Treasury that it is a loan and not a donation, which will save you a few euros in taxes.
Business Angels to finance a company
Business angels are people who are willing to invest in a business. They lend you their money in exchange for the consideration you have agreed upon.
The advantage for the investor is that up to 20% of the capital contributed to newly created business projects can be deducted from the full state personal income tax rate. In addition, he will earn money with the interest that you are going to pay him for the money he has left you.
The advantage for you is twofold. On the one hand, you obtain the capital you need and on the other hand, you have a person at your side who can tutor you and guide you in your business creation process, which is something that will be very useful for you.
Venture capital funds
Venture capital funds usually invest in newly created companies, especially startups. They thus obtain shares that they will sell in the future with the intention of earning more money.
Although this is a good way to finance a company if you need a lot of money, keep in mind that the fund acquires stakes in your business and can influence the decisions you make. In addition, over time you will sell those shares to a third party who will become a shareholder.
Crowdfunding
Through platforms specialized in this type of financing, you can publicly present your project and receive contributions from individual investors. Of course, you must have a business idea that is interesting and, in addition, offer something in exchange for the money they are leaving you.
In the case of video game creators who use this financing, it is normal for them to commit to delivering a special edition of their final product to investors. You can also directly offer a percentage of the profits.
Bartering
It is a commercial agreement between companies in which money is not directly lent, but resources are shared, which helps save. For example, a newly created law firm can offer legal advice to a web design company, in exchange for it creating a page for its business.
public aid
At the state, regional and even local level there is usually aid for entrepreneurial projects. Pay attention to the calls for public aid and subsidies and do not hesitate to present your project to try to access them.
Of course, make sure that you have a well-made business plan that is capable of convincing the institution that grant the subsidies that your project deserves one of them.
As you have just seen, when it comes to financing a company there are many more options in addition to bank loans and lines of credit, which are the most typical resources. However, once your business is up and running, the ideal is that you manage the benefits very well and make them grow with intelligent investments. This way, if you need more money in the future, you can self-finance all or part of the capital you need. Do you want to know how to do it right? It is best that you put yourself in the hands of experts who will help you manage your business’s money and get the most out of it.
