Three Ways to raise funds to start or expand your business
If you decide that you wish to start or expand your business, you will need to find some type of funding. Now this funding can be done through one’s personal finances, through loans from a bank, through fundraising or through investors. Let’s take a look at what investors have to offer. Investors offer funding through either equity funding or debt funding.
Equity Funding
Venture capitalists, large financial institutions or high net worth individuals usually offer equity funding. They tend to look for start-up businesses or companies that are at least five years old and that have the possibility of becoming prosperous companies. They may choose to take a role in the management of the company, or may just to watch passively from the sidelines.
Debt Financing
This type of funding is offered through banks and often time to smaller companies. The services offered are through such products as short-term loans, single-purpose loans, and lines of credits. Usually these types of products are offered with some type of personal guarantee from the customer known as collateral. The collateral protects the financial institution if the customer is unable to make the payments.
Fundraising
There are many ways to raise funds, from having auctions to dinners to selling cookies and candies. All of these have been viable ways to raise money.