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Small businesses and start-ups require a lot of initial capital to start off operations and in order to expand. There are multiple ways of financing the business depending upon the type of business and the amount of capital required. For large sums of money, a business owner or founder may need to dilute their equity in order to get the required capital support. Here’s looking a few ways to raise capital for small businesses.
Bootstrap your business
If you are starting a small business which is less capital intensive and if you have the required savings, you can actually dig into those to get the required capital for the initial period. This is called bootstrapping. Another way to bootstrap is to utilize your credit card limits for the initial period. Although, this method can only work for a relatively smaller amount and for a shorter period of time since it might affect your credit history and there is less money in hand to fall back upon.
If you have a product that is a notch above the rest in its category, you can actually start a crowdfunding process to raise capital for the same. There are a lot of success stories for this time of capital-raising across the world.
You can also apply for small business loans to get the required capital for the business. A large number of banks and lending institutions offer loans at low-interest rates and for varying terms. You just have to choose the right one that suits you and utilize the same. However, it is necessary to meet the institution’s lending criteria before they can offer you a loan.
Angel investors or venture capitalist
These days, with a slew of new businesses entering the market, a large number of private investors are working with small start-up to help them expand at the cost of equity in the business. They are