Although such business ideas often give grandiose hopes. And yet, for now, the only way to find the right amount of money remains with the bank.
Many banks offer start-up loans to start-ups in their product range, but banks are already keen on financing successful and mature business ideas. In order to obtain start-up capital from a bank, the entrepreneur will have to work on the most profitable business plan, otherwise the bank will simply refuse to invest their money in the borrower. Financing business ideas at an early stage of the market is hardly of interest to banking organizations as there is a high risk of losing the money invested. It is much more profitable for the bank to help entrepreneurs who are thriving and making solid profits for the first year.
And only a small percentage of creditor investors find new and unknown business projects for investment. They are not banks, and more often natural persons, seed capital and venture capital funds that specialize specifically in these borrower environments. The main purpose of these creditors is not to guarantee a guaranteed return on the loans, but to develop an innovative business idea and further promote it in the market. In other words, the investor gets his share of the most profitable and completely new business.
How to Find an Investor to Get Money for Business Development
When looking for a loan to develop his business idea, the entrepreneur must first determine which source of financing is best suited to him : a bank with specific loan programs or a private investor ready to offer the money needed for start-up capital.
When applying to a bank for a loan, you must first remember that it is not an investment investment in your business, but a regular loan that will have to be repaid in full, with interest and at accrued interest. You will always have to return the money the bank has borrowed, even if the business is not successful. It is for this reason that the bank looks at each novice entrepreneur as a “magnifying glass” and assesses his or her prospects for business growth. The Bank has the right to demand a pledge property if the loan is executed in large amount. The real estate in this case will be a guarantee that the bank will return the money. In addition to the borrower, the real estate bank may also require commercial guarantees (often part of your business).
By applying for start-up capital in start-up equity funds, the borrower receives a long-term investment in his business, but pays part of his equity for this assistance. The main peculiarity of obtaining a start-up capital from a private investor is that the amount of money issued is not considered as a loan that will sooner or later have to be returned to the bank. A private investor in any fund, from the outset, claims a share in the company, receives a share and becomes a co-owner of the company. If the borrower’s business fails, the investor is not entitled to a refund of the invested money.
The conditions under which a novice entrepreneur can get financial help to develop his business.
1.Credit for starting a bank business
There are a number of banks offering European financing for start-ups . These loans are essentially consumer loans. In this case the unsecured business loan will be available only in the amount of up to 10 thousand dollars. Larger lending from the borrower will require guarantees.
2. Business incubators
Business incubators operate on the principle of making some services cheaper for novice entrepreneurs. Discounts for rental of premises, accounting and marketing services often reach up to 85% of their real price.
3. Financial support for certain business lines
If the author’s business idea has every chance of winning the prize because of its creativity – the project is interesting and useful to the general public – then you can take part in a special competition and win a cash prize. The resulting amount can later be spent on starting a business. Likewise, young entrepreneurs can rely on state support for the Altum startup program.
4. Private Investors
Private equity as an investment is the most common form of financial assistance in the start-up phase of a business. An investor can be a simple person, also called a business angel, who has enough capital to drive a desired project. Often investing is not just about money , but also about experience, useful information or contacts.
5. Seed Capital Funds
Such a fund only deals with patenting new ideas, products that will be truly new with increased export ability. Usually such zero-business projects are technology, so you won’t be able to open a shop or restaurant this way.
In summary, 5 real sources – that’s enough to fund one business idea, given that it is successful and will pay off quickly. It is up to the new business owner to find the right niche for their financing and then focus on promoting their products or services. If you think that the success rate is not too high, it is better not to go to the bank for a loan, but to find a more loyal investor who will find your project interesting.