How To Fund Your New Business Venture

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getting a bank loan

Commencing a new business venture in a harshly competitive and economically challenged market can be a daunting prospect. You need to research your product or service, identify a target consumer segment, hire qualified and experienced personnel and most important of all gather financial resources to fund your project. Raising funds is crucial and the degree of success you enjoy will determine how strongly your business will perform, till it breaks even and starts making a profit.

The first thing to do is to look closely at your personal assets and properties, and determine whether you can provide the collateral needed for raising a bank loan. If you have a mortgage, one option is raising a home equity loan. If the value of your property is substantially higher than your mortgage dues, and your credit standing is good to excellent, you can request the lender to approve a cash-out-refinance because this loan guarantees you a substantial sum at one go. The cash out refinance option also makes it possible to extend the repayment terms of the existing mortgage to fifteen to twenty years that will considerably lighten your repayment burden. Offloading some assets like bank deposits, stock investments, jewelry, antiques or silverware may also help raise some funds.

Venture capital companies can also help you out especially if your business  places you in one of the dynamic and emerging markets where technology can be harnessed commercially like in semiconductors, personal computers, biotechnology, software and artificial intelligence. Your projects need not be confined to IT areas.  Venture capital firms are often better than banking channels because they involve themselves more in laying the foundations, and setting up, managing and overseeing the development of small firms. Companies like Intel, Apple and Microsoft have benefited immensely from Venture capital. An example is California based Asset Management Company that funded Coherent Laser which pioneered laser treatments in healthcare. These firms need to be approached with a comprehensive project plan that details your performance goals  and financial needs. Usually VC firms will acquire a stake in your venture in return for the funding they provide.

To get a business loan from a bank you will have to prepare your detailed business plan that outlines your infrastructure, know-how, material and personnel requirements and business estimates and estimated cash flows, supported by particulars of your personal assets like stocks, home equity and other investments. The banker will assess the viability and feasibility of the business and your credit standing before extending collateral based loans.

If your venture is not capital intensive, you can approach the government for small grants for starting a business. These are not loans and you do not have the compulsion of having to repay the money received. Then there are immensely successful specialists like doctors and engineers, IT and corporate financial pros who would be interested in funding small businesses that show good potential in areas that appeal to them and generate profits for them. Again, you may have to be ready to share your business plans and proposals, along with expected budget and cash flow particulars to press your case. If you are moving into an industrial project you can consider sourcing costly equipment and machinery through a lease facility that will save you considerable expenses.

There is one fund raising option that does not require you to present an excellent credit score, or prepare a detailed business plan, and that option is the humble loan for vehicle title. The usefulness of the auto collateral loan is that you get it even with a bad credit background. The car equity loan gives you 60% of the resale value of your vehicle, without any questions asked. All you need to provide is your car title documents (pink slip) on which a lien will be marked by the lender for collateral purposes to secure the pawn car title loan. The pink slip loan charges a reasonable 25% APR, and the loan can be repaid in flexible amortized installments just like a bank loan. It is one of the most hassle free and easiest  loans that can be availed quickly without documentary hassles.

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