Getting a business off its feet is one of the most challenging phases of an enterprise. One of the epitomes of these challenges lies in the form of capital. Getting enough capital for a start-up business requires a lot of preparations and skills. Without capital, the business is most likely to fizzle out into oblivion. The money is important in fulfilling various objectives of the business such as, paying the employees or purchasing products from suppliers. Many entrepreneurs have great business ideas but lack the financial power to actualize these ideas.Thankfully, the right strategies could be helpful in securing the financial security of the business. Before setting out to source for capital, the entrepreneur must first conduct a comprehensive research. The purpose of such an exercise would be to identify all the possible sources of capital. Furthermore, the research would endeavor to understand the needs of the target market as well as the competitors. Information relating to such issues is often available on the Internet and offline resources like newspapers, magazines and journals among others.

Sources of start-up capital for businesses

Those who conduct a thorough research related to the various funding options at their disposal would come across the following alternatives:

· Banks

Traditionally, banks have been the major sources of capital for start-up business. When seeking funds from any bank, entrepreneurs must be adequately prepared to maximize their chances of success. First, they need to arm themselves with a well-written business plan that outlines the various pillars of their enterprises. They must also display an astute personal experience in the business in addition to having a solid mentorship in the sector they want to enter.

Another strategy for securing a loan from the bank would be to put up collateral. The most conventional way would be to present one’s personal assets as collateral. Most banks would be willing to fund the businessperson if he or she has contributed substantial amounts of capital. For instance, those who have raised 20% of their required capital usually have high chances of securing loans from their banks.

· Micro lenders

For those who may fail to secure a loan from their banks, micro lenders might be a viable option. Besides providing them with the funds, such institutions would train and mentor these upcoming businesspersons. Entrepreneurs who seek the services of these micro lending institutions could benefit from loans of up to $50,000. These lenders are also advantageous since they have lax application requirements.

· Peer-to-peer lending

Another possible avenue to securing capital for a business would be peer-to-peer lending. This form of lending, also known as P2P, involves listing and bidding on loans via Internet-based auction platform. Examples of P2P include Prosper and Lending Club.

· Angel investors or venture capitalists

Venture capitalists (VCs) and angel investors have been known to help a lot of start-up businesses with finances. These professionals are usually interested in businesses that project a bright future with regards to high returns. Entrepreneurs that focus on areas like biosciences and technology stand good chances of obtaining help from angel investors and VCs. Such businesses also need to show a comprehensive exit strategy via public stock acquisitions or offerings.

· Credit card financing and home equity

When all the other avenues become blocked, credit card financing and home equity could get the business on its feet. It entails using the businessperson’s personal finances in the initial stages of the business. Thereafter, he or she can seek the assistance of a bank as pertains to expansion capital.

This post was crafted by the folks down at Naked Business Consulting, if you’like to know a bit more about how to raise capital, then have a look at their website.