Business depends upon the idea and vision of an individual or a group of people, and one cannot start it until and unless is confident about the idea. The most significant advantage of having your own business is that you have your own choices and you get to make your own independent decisions. But specific requirements of the business must be fulfilled. You should make sure that you have the abilities to start up a new business and along with that you are ready to give your time and strength to it as the establishment of a new business requires them all. Before starting a business one must do the math to do the estimation of how much capital is needed for investment and from which resources you’ll arrange that capital, and you must have a strong business plan to generate revenue as at some point you have to return the money lend from various resources for starting the business.
Every business person should be cautious about documenting the business deeds and other borrowing and lending activities to keep it legit. You should register the name of your business and also try not to do any illegal activity; one mistake can ruin your future as well as you’ll be left with nothing.
After this, the primary thing that comes in the way to start your own business is the lack of capital. One of the most basic things that every businessperson needs at some point either to continue, to establish or to start a new business is the loan. When any business entity has less capital, then it not only affects the progress rate of the entity but also decreases the employment rate which ultimately affects the lives of many people. There are many ways by which you can get a loan, and the biggest mean is the bank. But most of the banks charge interest. Following are the five ways to fund your business without an interest-based loan:
- Seek help from friends and family
You can raise the money by seeking help from your family and friends. You can ask any one of your relatives who can invest in your business and then you can always return the money once your business is thriving. It is the most common way through which you can take the loan without interest.
You can take an interest-free loan from your friends on a short-term basis. This is probably not one of the best ways to get help on a short-term basis for funding your business as businesses always have long-term entities. Investment made in the businesses are not easily convertible into cash at the time of demand for loans by the friends and relatives, and then it will be difficult to return on the spot. To ensure durability loan, it is essential to document the period of returning on loan; it will secure your relation with your friends and relative from facing any conflicts.
- Pledge your property
Another way through which you can gain the finances for your business is through your property. It can create a significant role for the investment towards your business. You can raise funds for your business through pledging your land and building for a specific period by following the proper documentation process to secure your legal rights or any dispute which may occur in the future. You can ask some relative or any other reliable person having financial resources to pledge your property and other assets as well in exchange for money from them.
- Sell your goods
Another way through which you can fund your business without an interest-based loan is by selling valuable goods. At first, it might sound like a tough choice by selling your assets or goods for funding your business. Therefore, each time you need capital, simply sell your luxury goods.
Once your business will be in better economic condition and generate higher revenue from the sales, you can repurchase these good. Things like gold, jewelry, cars, etc. can be a good source for the big amount of money for funding your business, and these things are easy to buy again in the future when your business generates good profits.
- Go for partnership
If you are running the business individually, then the easiest way with which you can fund your business is by bringing a partner into it. A partnership will bring the money into the business as well; it will create opportunities for business to expand in the future. It will secure the funds of partners invariably. You can choose a partner for your business and can execute a partnership deed containing rules and regulations and by-laws of that partnership firm by describing rights and duties of partners and their liabilities.
The partnership is always governed by the terms and conditions stipulated in the partnership deed, and that partnership deed must get registered in the court of law so that the partnership deed becomes legal. In case of any future conflict in the partners, the terms and conditions of partnership deed will do justice to them. A partnership is only possible in the partnership firm.
- Equity Crowdfunding
Equity Crowdfunding is the process whereby a large number of people provide money to a business in return for shares in the company. In legal terms, buying such shares in a start-up company is very similar to buying shares in any private company. You become a shareholder in that company, and you enjoy the right to receive dividends. You can issue participation term certificates for obtaining funds from the shareholders for raising funds for your business. You can invite existing shareholders to come and buy more preference shares from the private company this is one of another most accessible way to generate a considerable amount of funds for your business.
Here is a mini guide that may help you out in the case you need the help of a bank. Good luck!