Are you looking to set up a business but having problems with how to finance it? You’re having problems on how to get the capital funds to set up a business? There are several ways to finance a business. Find out how to source out capital funds for your business.

To start a business does not necessarily mean that you always need to have cash as capital. Cash is not the only factor that you must consider before you decide to start a business venture. You will find several ways to finance a business that indeed, cash may not necessarily the sole factor needed to start a business

Here are some ways on how to find source of capital funds to finance your business:

Funds from Personal Savings. This is probably the easiest way to finance your business. You only need to convince yourself that you have an excellent business idea. According to a survey conducted by some entrepreneurs, 90% of the aspiring entrepreneurs aged 21 to 35 years old want to start their own business within one to five years using their personal funds or savings.

Some early retirees are cashing in their benefits and using the proceeds as capital funds for a business. Some are taking advantage of early retirement programs to get hold of seed capital. According to a research, Col. Sanders of Kentucky Fried Chicken (KFC) started his business after retirement at age 65.

Many of would-be entrepreneurs never had a business before and believe that start-up capital must come from their own pockets. If this is your planned source of capital funds, you should immediately start systematic savings program to build up your capital base. Remember that the younger you are, the more you can risk your capital funds in a business.

Funds Borrowed from Relatives and Friends. Another way to finance your business is to borrow capital funds from your friends and relatives. Take note to make it formal and legal. Treat your relatives or friends as you would a banker. Explain in writing how you intend to use their funds and how you plan to pay them back. Perhaps, if you offer your relatives and friends a stake in your business, the may be more willing to lend you money. Another good strategy is to borrow smaller amounts among several relatives or friends. It is easier to borrow P1,000 than P5,000.

Funds from Bank Loans. Another way to finance your business is to tap most banks for a small business loan. Bank loans are generally supported by collateral. But some banks can arrange for you to have your loan guaranteed without collateral. Here in the Philippines, there are many private and quasi-government loan guarantee funds for small businesses. Among them are the Quedan Rural Credit and Guarantee Corporation, Small Business Guarantee and Finance Corporation, and the Guarantee Fund for Small and Medium Enterprises. Ask the lending institution about these loan guarantee programs.

Funds from Credit Cards. Another way to finance your business is to use your credit cards. Some bank credit cards have high loan limits that will enable one to start a micro or small enterprise. But they do require a certain minimum income requirement for such a high credit limit.

If you are currently employed and plan to start a business soon, I suggest that you apply for several credit cards now that you are still “credit-worthy,” since you still have a job and a steady source of income. Look for the one with the minimum fees in case of finance and penalty charges.

Funds from Venture Capitalists. Another way to finance your business is to take a loan from venture capitalists or money lenders. However, this can be a little expensive, interest wise. A lot of individual lenders may only be willing to lend money with collateral or a postdated check and require between 3% to 5% monthly interest.

Some may even want part ownership of your business. But if you have a business venture whose projected profits more than cover your interest and other expense payments, this funding source can be fast and easy to obtain without too much paperwork provided you must have a good business project.

Funds from Cooperatives. Another way to finance your business is to take a loan from cooperatives. Cooperatives are main movers in providing small loans to micro-businesses such as market vendors.

One example of a cooperative-type source of funds to finance your business is a well-structured “paluwagan”. A paluwagan is a pool of funds led by a strong and reputable acceptable to all the members. Each member can loan from the fund but he or she must pay it with interest for the benefit of other members.

Finance it thru Labor. Another way to finance your business is thru the use of your own labor. In this way of funding your business, you can start a business by becoming a middleman or agent for the type of business you really want to start. For example, you can be an agent for an insurance agency where you bring in jobs as an independent agent on commission basis and later open your own agency.

Funds from Pawning or Selling Valuables. To many, this way of financing a business is a last resort. Do you have a valuable watch, a mobile phone, laptops, or anything that has value and that can be pawned in a pawnshop? Then pawn it if you still need it. If not, then you can look for buyers and sell them and use the proceeds as capital funds for your business.

Do you have other ways and means to fund and finance a business? Share them below so that readers will keep informed just in case they want to start their own businesses.

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