Sources of Funds in Putting Up a Business

October 7, 2011 | Author: | Posted in Business
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Globally, there is a looming financial crisis. It is argued that it is the reverberations of the 2009 economic crisis. This is clearly echoed by the widespread inflation whether demand-pull or otherwise. This has many adverse effects in the affected economies. Prices of goods tend to go up as the lots f money available in the economy chases after few available goods. Banks are forced by authorities to raise lending rates to reduce the money flowing out into the already saturated circulation. This spells doom for young entrepreneurs who are left wondering where to get sources of funds in putting up a business.
Many entrepreneurs with breath taking ideas fail to bring these Ideas to realization due to such reasons or even more. However, there are many sources of funds in putting up a business. Below are a few;
? Savings-If you are anticipating starting a business in the future, and you don’t fancy the hustles involved with loans, this is the best option for you. Walk into the several banks within you and check what they have got to offer. Some offer interest on saving with little or no maintenance fee at all. Some don’t offer any interest while charging a maintenance fee on the accounts. That is why you are advised to consult widely before opening a saving account with any bank to ensure you accrue the total value for you money.
? Loans from family and friend-In many cases you find an entrepreneur borrowing money from friends and family. This has its own repercussions. The contributing parties may at times seem strict on how their money is spent. At times they want to be part of the decision process because they feel a sense of partnership of which is not really true. One is therefore advised to write a contract with contributing parties on where their involvement end and develop an efficient payment schedule which is fair to both parties.
? Partners-This involves joining up a partnership and pulling resources together to come up with a business venture. There are two kinds of partnerships, limited partnerships and general partnerships. You don’t have to document anything when stating a general partnership whereas in the limited partnership you have to document a lot. Another key difference is that in general partnership, the partners are liable for any loss or debt incurred by the business. Individual partners can be sued for any debt owed to third parties. In limited partnership that is not the case. It is good one gets to know more about the two before joining in a partnership.
? Corporations-If it is a start-up company, the proprietor could enjoy up to 30% contributions by developed corporations. The other advantage is that these corporations could share in marketing and technical expertise.
? Commercial banks-These banks offer many kinds of loans ranging from short term, intermediate to long term. It is always advisable that one goes to consult with these banks on how much you want to borrow, the period of repayment and the interest that the loan will accrue before borrowing.
Of course these are not the only sources of funds in putting up business. They are just some of the most common. That means if you are an entrepreneur out there wanting to start a business, you should not lose hope or give up yet, there are many opportunities in plenty. All the best!

Sharon M Brooks is an experienced writer and researcher on topics like sources of funds in putting up a business and small business startup money.


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