5 ways of financing for entrepreneurs without money
Today I bring a guest article by Maximiliano Parreno, an entrepreneur who knows what it is to have the desire to start a business but do not have the capital to start it.
And that's precisely what he's talking in this post: how you can also get financing for entrepreneurs if you do not have money to start your own business.
How to get funding to start a project? We've all asked this question when we wanted to start a new business Yes or no?
Most entrepreneurs do not have the money needed for the implementation of our business idea.
Then I try to show in summary some of the financial options that we entrepreneurs as well as the next steps.
Because it will not be for lack of options on the market.
And funding we are not just talking about loans being in what most are thinking, there are many other alternatives.
Among these options we can talk about banks, private financial, venture capital companies, crowdfunding, the crowdlending, capitalist partners ...
And there are still options, what happens is that these would be the most common in the market. Even with all first thing you should always do as an entrepreneur before asking for a loan to build your business is to know where want to do the processing.
Because according to where you want to do the processing, funding will be one or another well that the odds will be higher or lower.
The problem they are entrepreneurs when they want to borrow money for your business is that they do not understand the differences between each entity.
Have little to do loans for entrepreneurs for example can perform banking entities that make individual financial.
The same if we compare these financial loans with financing to be granted by venture capitalists or venture capital firms. Entrepreneurs need to be aware before any of the advantages and disadvantages of each and every one of the options.
You should also know that depending on the type of business is best to do the processing in one place or another.
5 lenders for entrepreneurs
If you do not have clear advantages and disadvantages of each option here you the I will explain. As a first option we will point out the banks because they are the traditional financial institution.
These entities are what made loans without collateral both as collateral. If you are an entrepreneur and still do not have the operating business will most likely be asked for guarantees.
Performing loans, that is, it is money that entrepreneurs have to be repaid with interest within a specified period applied.
Loans are not characterized by being flexible precisely often have very distinct conditions. What I mean by this? Well, if it is a loan you must have clear signatures that can make the loan repayment.
What banks often set?
Two things, first in the business plan being this something that always has to present the entrepreneur and the other on the guarantees. The bank option is perhaps all the more complicated options.
Especially considering the current banking situation which has spent years without paying money.
Having said that as an entrepreneur you have to make good use of the different aids that often promote the governments of each country and are usually available in January.
These grants are handled mostly by bank assuming the government of the capital grant.
Banks in that sense when an entrepreneur who requested the money often promote two types of financial products: loans offered directly by them and those whose capital comes from any subsidy or state aid.
2. Venture Capital Companies
As a second alternative we will name the venture capital companies. This is the option that might recommend if your business is innovative and also are willing to let go of part of the business.
The venture capital companies are formed by investors who invest in business ideas carried out by entrepreneurs.
On the positive side we can say that we received funding for the creation of the company has fixed conditions. We must not return to a fixed term as if passing on loans.
This money becomes part of the capital can not reclamarnoslo the other partners.
The downside of all this is that we lose part of our company. Has been many times that with the entry of venture capital entrepreneur even gets to lose control of your business, hence there is to know very well how to carry it out.
What is the aim of the venture capital firms?
They seek to help the business grow thus increasing their value after a few years (five for example) sell the shares at a higher price.
This funding is widespread in countries like the US, England or Canada, but gradually is spreading to other countries. It is perhaps all the options that we consider best for the entrepreneur.
Financing for entrepreneurs
It is true that lose part of your company but in return you get money for building your business. The risk you run with this option is smaller than with the bank because if the business does not work out just've lost time, not money.
Where to find venture capital? One option is for Internet although I always recommend other options such as could be congresses and trade fairs.
Third talk about crowdfunding platforms. It is also an option in the similar to venture capital with the difference that are other investors who finance market.
Crowdfunding investors often invest affinity rather than business expectations.
Of all options it is also more complicated by the few existing investors first and second because it is still a little-known option.
Never enter traditional business projects, they seek above all originality and audacity on the entrepreneur. Just look at some of these platforms to see how often finance highly innovative businesses.
4. Loans between individuals
As a fourth option pointed performing financial loans between individuals. When mention this option tell you that work similarly to banks with two different ways.
On the one hand they are faster and secondly loans are more expensive. Why are more expensive loans from private financial?
They are because they are loans between individuals, ie who invests where funding is an individual or company in exchange for a return.
Given that these financial do not have the same privileges as the banks (capture deposit, interbank market among others) is normal to have a higher cost.
A change who processed through this option gets faster and more easily.
What are the requirements in these financial loans for entrepreneurs? Above all have the same guarantees that happens with banks. They can also make loans without collateral but are a minority.
5. Public subsidies
As an alternative to all these options have subsidies for business creation.
All countries in one way or another put such aid as interested enhance entrepreneurship in the country by the value contributed to the economy.
It is something that we can use but as based on my experience there is not trust. The number of grants for the large number of entrepreneurs who apply are very few.
Also you have to take into account one thing: Most grants are not refundable, ie, function as loans without cost in the form of interest rates.
One of the mistakes of entrepreneurs when they get a grant for your business is to think that the grant money does not have to return when almost always do have to do it.