Table of Contents
- Business Funding Options
- 1.Apply for Personal Loan
- 2.Use a credit card
- 3.Secure a microloan
- 4.Peer-to-Peer Lending
- 5.Get a bank loan
- 6.Apply for Bank Loan
- 7.Use Personal Savings
- 8.Launch a Crowdfunding campaign
- 9.Angel Investors
- 10.Get support from family and friends
- Final Thoughts
Note: This article is sponsored by Go Bear, the Asia’s leading financial services and data platform.
According to a recent study from the Bureau of Labor Statistics, 20% of small businesses fail in their first year, 30% of small businesses fail in their second year, and 50% of small businesses fail after five years in business. Lack of funding turns to be one of the common reasons. It is commonly popular that money is the bloodline of any business.
The long painstaking yet exciting journey from the idea to revenue-generating business needs a fuel named capital. That’s why, at almost every stage of the business, entrepreneurs find themselves asking – How do I finance my small business online?
While money doesn’t grow on trees, there are several ways you can seek funding for your small business idea—some more traditional than others.
Here is a comprehensive guide that lists 10 funding options for startups that will help you raise capital for your small business. Some of these funding options are for the Philippines business, however, similar alternatives are available in other different countries.
Business Funding Options
1.Apply for Personal Loan
Another smart easy way to fund your small business online is to apply for a personal loan. Personal loans come with lower interest rates compared to credit cards – currently between 6% and 13%, depending on your credit history.
Personal loans allow you to borrow relatively small amounts, for example, P50,000, although they can go much higher. You won’t have to use an asset (such as your house) as collateral, which means less risk for you. However, you’ll probably need a high credit score to get a good interest rate.
If you’re planning to apply for a personal loan, we made it a lot easier for you!
2.Use a credit card
Credit cards are among the most readily available ways to finance a business online and can be a quick way to get instant money. If you are a new entrepreneur and don’t have a tons of expenses, you can use a credit card and keep paying the minimum payment.
However, keep in mind that the interest rates and costs on the cards can build very quickly, and carrying that debt can be detrimental to a business owner’s credit.
If you do plan to use credit cards to fund your small business startup, it’s best to use credit cards offering rewards or cash-back programs for business purchases. Also, if you plan to borrow the money for a short period – 18 months or fewer – look for credit cards with a low or 0% introductory annual interest rate (APR).
Top 5 Best Credit Cards with Easiest Approval
If you’re currently looking for a credit card you can use to fund your small business online, I highly recommend you to go visit Go Bear website. Here, you can find wide range of credit cards with low annual fees and monthly interests.
3.Secure a microloan
The lack of credit history, collateral, or the inability to secure a loan through a bank doesn’t mean no one will lend to you. One option would be to apply for a microloan, a small business loan ranging from P10,000 to P100,000.
Microloans are often so small that commercial banks can’t be bothered by lending the funds. Instead of a bank, you need to turn to a microlender, a non-profit organization that works differently than banks.
Microlenders offer smaller loan sizes, usually require less documentation than banks, and often apply more flexible underwriting criteria. There are a few hundred microlenders throughout the Philippines and they often charge slightly higher interest rates for loans than banks.
If you’re looking forward to applying for a microloan, I strongly recommend you go visit the GoBear website to look for a short-term loan that interests you. Here, you can find lenders that offer reasonable interest rates and flexible payment periods.
Peer-to-peer lending means borrowing money without going through a traditional bank or investment company. Under P2P, a borrower posts a loan request on a P2P platform – such as Lend.ph or FundKo – stating the amount desired and reason for the loan.
Potential investors review the request and agree to loan various amounts of money to the borrower up to the desired amount. Once a loan has been funded, the borrower receives the total amount lent and then pays the loan back through fixed monthly payments made to the platform, which then repays the investors based on the amount each one lent.
While P2P lending has advantages over traditional bank loans – including lower interest rates, fewer fees, and greater flexibility – the basics of lending still apply. Borrowers have to fill out an application and provide financial information that will be assessed by the P2P platform. So, you need to have a decent credit score to obtain a loan, and your credit will be damaged if you default on it.
Best P2P platforms
5.Get a bank loan
Normally, banks are the first place that entrepreneurs go when thinking about funding their business online.
The bank provides two kinds of financing for businesses. One is a working capital loan, and the other is funding. Working Capital loan is the loan required to run one complete cycle of revenue-generating operations, and the limit is usually decided by hypothecating stocks and debtors.
Funding from the bank would involve the usual process of sharing the business plan and the valuation details, along with the project report, based on which the loan is sanctioned.
6.Apply for Bank Loan
The first easy way for you to fund your small business online is to apply for a business loan. You can apply for a business loan via traditional banks, credit unions, and online lenders.
Depending on the lender and type of financing, you may be able to borrow anywhere from P50,000 up to 1 million pesos. The exact amount depends on your credit score. What you plan on using the funds for and your existing relationship with the lender may also play a role. And some lenders might require collateral for larger amounts.
7.Use Personal Savings
Using your personal savings is the easiest way to finance a small business online. Whether the money comes from your checking account, a family inheritance, or stock market investment, using your assets is not only popular but also demonstrates a business owner’s commitment to other potential investors, which can ultimately help win additional funding from third parties.
8.Launch a Crowdfunding campaign
Crowdfunding is one of the newer ways of funding a startup that has been gaining a lot of popularity lately. It’s like taking a loan, pre-order, contribution, or investments from more than one person at the same time.
How crowdfunding works?
First, an entrepreneur will put up a detailed description of his business on a crowdfunding platform. Then, he/she will fully describe the goals of the business, plans for making a profit, how much funding needed and for what reasons, etc. and then consumers can read about the business and give money if they liked the idea.
Those giving money will make online pledges with the promise of pre-buying the product or giving a donation. Anyone can contribute money toward helping a business that they believe in.
Best Crowdfunding Platforms
Angel investors are individuals with surplus cash exceeding millions of pesos and a keen interest to invest in upcoming startups. They also work in groups of networks to collectively screen the proposals before investing. They can also offer mentoring or advice alongside capital.
Knowing this, angel investors can be a good source of capital for your business. First, you must have a solid business plan put together and a great pitch ready. You have to capture their attention with enthusiasm and promising data points about your company’s current situation and future potential.
So how do you find these angel investors? You have to do your research. Many angel investors prefer to keep a low profile and can only be identified by asking other business owners or financial advisors. Other angels have joined networks, making it easier for potential startups to locate them.
10.Get support from family and friends
If you can’t tap your piggy bank, or if your credit score isn’t good enough to convince a bank to lend you money to fund your small business online, you can always turn to the people who know you the best.
Family members, relatives, cousins, and friends can be easier to persuade than any other anonymous bank officials. They are also more likely to look past your current account balances and credit score when determining whether you are worth the risk of extending a loan.
Moreover, they are less likely to demand stringent repayment terms or high-interest rates – and in the case of family members, you may escape interest rates altogether.
If you’re looking forward to applying for insurance products, credit cards, loans, and banking, I strongly recommend you go visit the GoBear website. The fun fact about Go Bear is that it allows you to compare products that you want.
Why Choose Go Bear in the first place?
GoBear is Asia’s leading financial services and data platform. It was launched in the Philippines last July 14, 2016, following successful operations in Singapore, Thailand, Malaysia, Vietnam, Indonesia, and Hong Kong. The website houses all the relevant information on financial products credit cards, travel insurance, and personal loans so that you can compare them side by side in just one single click on your gadget.
While Go Bear does partner with banks and insurance providers to provide accurate and up-to-date details, it does not promote any of the products they offer. Go Bear takes pride in being unbiased, simple to use, and transparent by offering consumers the best deals.
- Go visit GoBear website now.