Many aspiring entrepreneurs have dreamed of starting their own businesses but are thwarted by their most difficult challenge: raising funds. If you don’t have the luxury of savings, you can still kickstart your dream business if you know where to look. We listed 3 money sources you can look into to help you get started. Let’s learn more below.
Banks offer several business loans suitable for your needs and financial capacities. When considering a bank business loan, look into the annual interest payments vs. the terms. Many banks offer short and long-term loans with annual interest rates starting at 6%. If you need bigger funds, you can also use your real estate mortgage or a deposit as collateral.
You can also look into cooperative loans, which are relatively smaller in scale than commercial banks. You can only apply for a loan if you’re a member of a cooperative. When applying for a loan, look into the interest rates and additional service fees. Most coops start their interest rates at 8% annually with a service charge of 1%.
You can research more business loans available for startups in the Philippines.
Depending on your business plan, consider which among 3 types of investors is suitable for you. The first type is the ‘pre-investors,’ which are your family and friends who contribute a small amount of money to help you get started. The second type is known as ‘passive investors,’ who are seasoned businessmen who invest capital but don’t want to be involved in running your company. If you’re interested in this, you can look up “Angel Investors” in the Philippines.
The last type is the ‘active investors,’ who invest capital, time, and effort in building your business. Active investors play an active role in setting your business targets and giving advice to ensure success.
Crowdfunding allows is a way to raise and collect money for businesses or projects through many people. There are 4 basic ways people can crowdsource to help your business:
- Reward-based – For a certain amount, people can have access to your product before anyone else. They can also earn merch, discounts, and other freebies.
- Equity-based – This one is a bit tricky as you allow individuals to have an equity stake in your business.
- Lending-based – This type is a great way to get a loan but can also be complicated since individuals will expect a more fixed return. Like equity-based, it’s best to consult a financial advisor before starting.
- Donation-based – You will patiently wait for the public to donate until you raise the funds you need.
Popular crowdsourcing sites in the Philippines are:
As an aspiring entrepreneur, it’s best to be wise in handling your money matters. Don’t go around borrowing blindly and drown in debt to keep your business afloat. Always research and be knowledgeable in whichever financial source you’re interested in. Good luck!