Financing a Business: Start-up Funding Options

reliable accountantMoney is the most important factor in opening a new business. To support your start-up, you need sufficient funds to cover the early stages of your business until it provides a profit. Read on to know the right funding option suited for your business needs.

Venture Capital

This equity addresses the funding needs of entrepreneurial companies with predictions of high returns. Such investments are made as cash in exchange for shares or a position in the invested company. Most venture capitals come from investment banks, investors, and other financial institutions.

Angels

These are people looking for an investment opportunity that will offer them higher returns than typical investments. Angels provide a portion of capital to your business in return for partial ownership or debt repayment. Angel investors write more checks the venture capitalists and invest in over 60, 000 companies a year.

Personal Savings and Credit

Your first source of capital is your personal savings. The biggest advantage of this option is 100 percent control and ownership. This also involves a huge risk, however, as you are putting all your assets on the line. Ask a business consultant or a Salt Lake City accountant to know if this option suits your business.

Crowd funding

This is an ideal alternative to fund a venture, as you can do it without giving up equity. It is a way of raising a fund by asking a large number of people for a small amount of money. Many rewards-based crowd funding platforms help you raise funds in the community by exchanging products or other items.

Banks

These provide different types of financing and they fund all types of assets including working capital and real estate. Many banks require personal guarantees or secured interest on personal assets. They also offer payment flexibility, as you can pay the loan early or terminate the agreement.

Contact a business consultant or a reliable accountant to help you choose the right funding source for your business.