Business

Where to get Business Capital

Where to get Business Capital

Business Capital

Business capital is everything. You can’t start or run it without what’s necessary to operate. We can analogize capital to building materials. You can’t construct a house without the necessary materials.

Now that you’ve registered your business or company, you need to take it a step further. This step relies on your goal. For what purpose did you create it in the first place? Well, some people at the time of registration do not have an idea of what to do. They do so to get ideas along the way. Which is pretty a good thing. You don’t have to wait.

Funding your business is no joke. It requires a source of finances. Although there are several sources, many do not favor startups. As we shall see them, you’ll realize that there are strict requirements that may not favor you. However, some sources are suitable.

Sources of business capital

Personal investment

Personal investment is one of the best and most safe sources of capital. By safety I mean, you are not under pressure to turn around capital quickly to refund. Financial pressure for a startup is not an interesting thing as it can shut the vision.

Now, what do I mean by personal investment? This could be collateral, savings, or any other source of personal capital that you commit to the business. A typical one here is savings from a Sacco, fixed account, sale of property, or using assets as collateral. Whatever it is, you’ve to plan before taking such a step.

Patient capital or love money

Patient capital or love money is a good business capital. This is money you get from family members or friends. Although the word patient capital is used differently in different contexts, for this purpose it means money from your close people. You can source money from them to establish your business and refund them depending on your agreements. In other cases, friends just help themselves without necessarily asking for refunds. This depends on your relationships.

Venture capital

Venture capital is a form of equity financing. It could be an angel capital that targets start-up businesses or a venture capital fund that seeks businesses with high growth potential. This form of funding takes some shareholding in your business for the period agreed. There are many things you need to learn about this source of funding so that you don’t rush into a deal only to regret it later.

Crowdfunding

Crowdfunding is an innovative way to collect money to fund a business idea. It’s done online where fundraisers meet with the crowd who are willing to raise money to finance the business idea. There are quite a few types of this source of business capital that you can check to understand more about it. Service providers who connect those with ideas to those with funds charge fees when you get the target. However, when you fail to achieve the target, then funds are returned to owners, so no money is lost.

Business incubators

Business incubators help startup businesses move beyond their embryonic phase.  They help innovators achieve minimum viable products. When a startup has achieved this, then it falls into the accelerator type. Now, incubators leverage their skills, technology, and resources to assist the business startup with a part ownership plan. Usually, they are patient with the business pick-up before commercializing it. It is a good source of capital for business particularly when you’re seeking support in a certain area.

Loans

Loans from commercial banks, saccos, mobile apps, and other lending institutions are great sources of business capital. As you plan how to intend to operate your business, it is wise to consider the cost of these loan sources. In Kenya, Sacco loans are quite cheaper compared to commercial bank loans. It takes you some steps and time to join a Sacco and grow your assets that you can use as a source to finance your business. You can find out licensed saccos here so that you don’t fall into the hands of the wrong people.

In a nutshell, there are many sources of business capital. It depends on several factors that we shall discuss in our upcoming post. As an entrepreneur, you go for what agrees with your visions. Do not fall prey to scammers, cons, and schemes that promise you good financial deals only to siphon you.

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