Only a lucky few have sufficient savings to open and operate a business long enough for it to become profitable. So let’s look at some ways you can get the all-important support for your dreams.
Banks seem to be the most obvious source of possible capital. Banks, after all, exist to provide mobility for money. However, a start-up business might have trouble convincing a bank to loan money. There is no record of past success that can assure a bank that the business can repay the loan.
Some banks require a record of at least two years of operations with the last year being profitable before they will even consider giving a business loan.
Credit Cooperatives have less stringent requirements since they tend to be more community based and generally cannot afford to be so selective in who they grant loans to.
However, credit cooperatives usually require that the people who obtain loans from them must be members of the cooperative. So this may entail costs and time constraints if the business owner did not anticipate going down this route.
Angel Investors are a broad category of people who are willing to lend money to the business owner from past interactions with him. Otherwise referred to as Social Credit, the business owner can rely on friends and relatives to lend him from their own savings for his venture.
However, this is dependent on the level of social credit the borrower has and the kind of people he knows. A person who doesn’t see a lot of people with ready savings isn’t likely to be able to draw on his social credit to get anywhere.
For example, someone who grew up in a poor neighborhood probably only knows his neighbors and family who are likewise living in poverty. It is not likely they can lend him any money for his venture.
A business won’t be profitable overnight. The Business owner needs to find a way to sustain his business plan from startup until it makes enough profit to support operating costs, at least. This may require getting additional capital.
Of course, getting insurance will cost some money, but given how much opening a business and keeping it running is, the small extra cost is a great way to protect against bankruptcy.
At Wellcovered Insurance, we aim to provide comprehensive insurance policies that make your life easier. You can get more information about our products and services by calling our agency at (386) 218-4951. Get your free quote today by CLICKING HERE.