Is it possible for a business to succeed without funds in it? No, I don’t think so. It’s either you need funds to start up your business or you need the funds to grow your business. Most entrepreneurs have nice business ideas; some just want to copy a particular business model they believe in. But the problem these particular people face is the lack of funds to kick start that business idea.
In this post, I will be writing about several ways you can use to get funds for your business.
Before you go out to seek for funds, you should know that nobody would give you money for free except maybe your loved ones. There is usually a price you have to pay when people or companies give you loans.
You should also have good strategies set in place for your business to succeed. This way, you get to save up and pay back your debts within the stipulated time.
So, here we go.
If the word is new to you, I will be explaining it in a bit. Exactly as enterprise boom explained it, crowdfunding is a method of raising funds from asking a lot of people for money. No, it’s not what you are thinking. I don’t mean walking on the streets and asking people for money.
There are two types of crowdfunding; The offline crowdfunding and the online crowdfunding.
This kind of crowdfunding is done offline. It is the kind of fundraising program you see in churches/mosque, cooperative societies e.t.c. In offline crowdfunding, you have to organize a gathering, tell them about your idea and expect donations from them. It is best done among people that are familiar with you.
This kind of crowdfunding is done online via crowdfunding websites. Here, you have to signup with the crowdfunding site of your choice, fill out the nitty gritty of your project and let your campaign go live. Online crowdfunding is the best as it allows you get funds from anywhere in the world.
Below are a few success stories from online crowdfunding;
When John Jennings, a music artist was diagnosed with kidney cancer and needed a lot of treatments, his friends stepped in to help him ease the burden. They never expected what they got from the online crowdfunding campaign they had started. Within two months of running the campaign, they were able to get funds worth $74,720. You can see this successful crowdfunding campaign here.
Candice Peters tried 13 unsuccessful times to get a loan from banks to fund her fitness studio, Hyde Park body boutique. She finally obtained a special minority business loan through Borrego spring bank.
When Peters needed more funds to expand her business, she turned to SoMoLend and was able to raise $9000 with the help of three funders through the online crowdfunding platform. With this funds, Peters was able to remodel her studio, employed two more personal trainers and launched the Spincinnati indoor cycling class—an effort that was a big hit with customers that it spurred the next phase in Hyde Park Body Boutique’s growth.
Not all online crowdfunding websites support Africa. Here is a List of crowdfunding websites that accept Africans;
Most of these crowdfunding websites pay your funds via direct………..
You have to be creative when creating your crowdfunding campaigns. Check Forbes article on how to create a successful crowdfunding campaign.
2. Loan from Bank
Banks give loans. In fact, it’s another way they use to make money. When a bank borrows your money, they collect interest from you, the interest is their profit. The more loans they give out, the more money they make.
Before going to a bank to get a loan, you should note the following;
A bank won’t lend you money without collateral. Collaterals are your assets that can be used to cover your loans in case you are not able to pay back. A typical example of what can happen if you don’t or can’t pay back is what Guaranteed trust bank did to Hitv in 2012.
A bank won’t borrow your money if you do not have a concrete business plan.
Banks won’t also borrow your money if you have a bad credit history. A bad credit history means you have been borrowing loans from other banks and you’ve not been paying or you always pay late. Banks can easily track your credit history with your Bank verification number (BVN).
Simi Alade of Hge capital has written 3 lessons he learned from obtaining small medium enterprise loans in Nigeria, you should check the lessons he learned.
3. Borrow from loan websites
There are websites that can loan you money and they can do this within 24 hours. Sites like paylater would borrow you money without physical contact, everything is done on their website.
although loans from this source might be little compared to the others it’s worthy of mention.
Below is a list of website you can borrow money from and payback later;
You can borrow money from Paylater without leaving the comfort of your home. You apply for the loan through your mobile phone and get your loan approved almost same day. Paylater can loan you up to 1,000,000 Naira.
If you are eligible for the loan, paylater will credit your bank account almost immediately.
Note that; if you are not able to pay the loan within the stipulated time, you will receive bad credit rating from paylater. This would make it hard for you to borrow money from any other platform in the future. Legal actions may also be taken against defaulters.
4. Borrow from Family, Friends or Colleagues
Your family and friends can help you fund your business as these set of people already know you and will grant you a loan based on your integrity and character.
When sourcing for funds from family or colleagues, tell them what you need the money for and how you intend to profit from the business you are borrowing the money for. You should also tell them when you intend to pay back.
Depending on how financially buoyant your family member, friend or colleague is, you should not request the whole funds from a single person. You can split the total money you need into 20 units and request from 20 people that you know are capable of giving you the funds.
5. Seek Angel Investors
Who are Angel Investors? Angel investors are wealthy people who provide capital to business start-ups in exchange for ownership equity or convertible bonds. They are not really sent from heaven to come and fund your business :). They fund your business to make profits.
Where can you find Angel investors?
Don’t bother going to heaven, they are right here on earth.
There are two easy ways to find Angel investors. It’s either you find them online or you find them at an event organized for start-ups.
Angel Investors are probably looking for start-ups to invest in, so your best bets are a startup or business expos. Mytopbusinessideas also highlights that you can find them at Alumni meetings and charity events.
As I stated earlier, you can find Angel Investors online. There are specific sites where you can find lots of Angel Investors. Below are some of the sites you can find Angel Investors;
When you meet Angel Investors, do your best to impress them. An Angel investor would not give funds to an entrepreneur who is not confident with his business plan.
There are so many startups in the world today seeking the attention of Angel Investors. Your job as an entrepreneur or founder seeking for funds is to be able to convince investors on why they should invest in your business.
Do your best to impress an Angel and watch funds flow into your business.
6. Sell your properties
Jeta Amata needed funds to produce his movie The Amazing grace, he had to resort to selling his house. The movie was a huge success after it was released in 2006. When funds are becoming hard to get, your last sure bet may be resorting to selling your stuff.
If you are not convinced enough to sell your things to fund your business, then maybe you should have a rethink about that business.
7. Development Banks
Development banks are financial institutions dedicated to funding new and upcoming business and economic development projects by providing equity capital and loan capital. This kind of banks helps small and medium enterprise with loans at better interest rates.
List of development Banks In Nigeria
- Bank Of Industry (BOI).
- Bank Of Agriculture (BOA).
- Nigeria Export Import Bank.
- The Infrastructure Bank.
- National Economic Reconstruction Fund (NERFUND).
If you are not from Nigeria, you can google up other Development banks in your country.
The Bank of Industry will not loan you money if you have not registered your business name. In fact, registering a business name should be a prerequisite for obtaining loans from any kind of bank or organization.
The Bank of Industry is very selective when giving out loans; Therefore, your business must meet some certain criteria to be approved. Walk into any Bank Of Industry office nearest to you and pick up the application form to apply.
The Bank of Industry Nigeria has written on its website 8 things to know before applying for a BOI loan.
8. Micro-Finance Banks
Microfinance banks are banks that offer financial services to entrepreneurs and small businesses. One of the financial service micro-finance banks render is the provision of loans to small business owners. Once you start up your business, it is a good practice to register with at least one of the hundreds of microfinance banks available.
To get loans from any Micro-finance bank, you need to open an account with them and deposit up to some percentage of money before you can request for a loan. Some microfinance banks would require you to deposit at least 10% of the money you want to loan before your loan would be granted.
List of Popular Micro-Finance Banks In Nigeria;
- AB Microfinance Bank.
- Accion Microfinance Bank.
- FBN Microfinance Bank.
- Rehoboth Micro-finance Bank.
- LAPO Microfinance Bank.
- Fortis Micro-Finance Bank.
You can get a loan from Lift Above Poverty Organization (LAPO) without collateral. There is a post on Ogbongeblog on how to apply for a loan from LAPO without collateral.
After getting your loan what next? Remember that the loan is not your money and you will eventually payback.
Put more efforts into your business, promote your business, make more profit and pay back your loans.
Do not be afraid to take loans. Most successful businesses you see around started with loans. Some of them still run on loans, yet they are successful.
Hope this post helps you in getting started. You could appreciate by sharing with the share buttons below.
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