Alternative ways of funding...

Taking a loan is a common thing for most businesses nowadays and if they stick to the plan they have, they pay back when due. There are two main reasons why one needs a loan. One is to start a business from scratch and another is how to sustain a business plan. When you are starting a new business from scratch, you need people to believe in your product or service because you have no track record. So most of the time, people who start businesses go for loans to help them buy the products such as raw materials so that they can begin production at a cheaper rate even if it is a low rate because it will make it easier for them to get the profit once they start selling.

The other one is, if you already have a business and it's not doing as well as expected and you don't have enough money to carry on with your marketing plans, that's where you can take a loan to use it as capital.

However, this is not the story for many here. There’s an alternative way of getting loans from institutions similar to banks. They offer loans without much documentation. All you need is a surety, an address and a business plan. The rigorous and almost impossible way of getting loans from banks make these “small scale business-friendly institute” a go-to for many. They have various names here like Easy-money, Lapo and many more. However, instead of people sticking to the business plan they submitted, they end up spending the money on something else which leads to public embarrassment.

The problem with small businesses is that they tend to bite more than they can chew and don’t follow the business entity concept despite funding their business with a loan. They spend the business money as if it’s their’s and also engage the services of family members who most times are more of a  problem than a blessing to a business.

One thing you need to have in mind before borrowing or applying for a loan is that money has wings, especially money that isn’t yours. You need to ask yourself a question-are there alternative ways of getting money instead of sourcing for a Loan.

Alternative ways of funding a business

Before talking about other ways to fund a business, I need to mention that though it’s great to think big and aspire for the best, you need to be rational. There’s nothing bad in starting on a small scale before moving on to something bigger. The big firms we have out there today all started small before growing into what they are today.

-Self-funding

The first way you can fund a project if you don’t wish to go for a loan is to use money from your pocket. This is the easiest and safest way, you will have peace of mind since there is no fear of someone knocking on your doors asking for the money borrowed. This isn’t common because most people have no savings or don’t have enough money to start up what they have in mind.

-Friends and Families

Taking loans from friends and families is anyone easier escape from getting loans from these institutions. Close friends and family can lend you money with the expectation of no interest or little interest. The downside is that they can call any day asking for a refund due to the present situation they are passing through, also a little disagreement can lead to them asking for a refund. In all, it can dampen one’s relationship with them.

-Find like minds

This is different from a partnership. It doesn’t require you to join hands with others to build a business but add them as investors. You only need to prove to them that it’s a good plan. Show them a good road plan and if they believe it’s a good thing to put their money into they will and receive the profit on their investment when it’s time.

Conclusion

Whichever method you choose to use, even if it’s to get a loan from a bank or any financial institution. What matters most is discipline: how you implement the plan, your spending style and your desire to grow.

Thanks for Reading!