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10 Ways to Fund Your Startup: Traditional Lenders & Bridge Loans
Hello all. And welcome to part 3 of my series for 10 Ways to Fund Your Startup. As you may know, if you're someone that has a great startup idea for a business, it can be hard going trying to find the funds for it to get it started up. So I've been doing a series of posts that reveals 10+ ways and things you can do to raise some funds for it. To get your startup idea, started up!
And so far I've talked about using the power of the crowd and and using crowdfunding to help you, from Equity Crowdfunding to Donation Based Crowdfunding. And on Bootstrapping too. Of which, is basically just using the funding you have access to. And that will be the basis for today's guide. For when it comes to getting access to funding, we can turn to Traditional Lenders, banks etc.
10 Ways to Fund Your Startup: Traditional Lenders
Your own bank might be just and only what your startup idea needs to get it started up. And most banks want to help their customers business ideas get off the ground and be successful as that means they'll make money through you. And so, going to your bank and asking them for a loan might just be the most viable option there is for you. You should schedule an appointment to speak to an adviser, bring along your business plan and model, as well as a thorough understanding of the risks involved. Not to mention, you'll likely need a good credit rating. But if your pitch is solid and you do have a good credit rating, the chances are high that your bank will loan you enough money to get your business off to a flying start!
- Banks are lenders and not investors, your business will need to be established enough so you can show a regular revenue income stream to them so they will lend you it in the first place.
- Banks are like shops in that you can shop around for the best deal. It's not necessarily your own bank that can lend money to you so shop around for the best deal for one that will.
Bridge loans are a little different to a standard bank loan. It's more of a short term loan that can boost your bank account balance until you can secure enough funds to get your business up and running and earning some revenue for a set period of time. Usually this is for about 3 to 6 months but they can be for longer. The only catch is the longer time you have to pay it back, the more you usually have to pay back. Bridge loans can help you keep going until such a time when you think and believe you'll be making enough revenue to be fully self-sufficient.
- Bridge loans carry high fees with them so be prepared to pay back more than you borrowed to insure the high risk nature of the loan they're giving to you.
- A bridge loan should be something you look into only if you're not able to get a traditional loan due to the high fees of them.
I know these current ideas in part 3 of this series are something you've already considered. And that's partly why I wanted to do another series on 25+ fun and creative fundraising ideas too! But they are very viable options and for a lot of people have been all they needed without needing to do anything else to try and raise the funds. Plus I hope that from what I've told you about them they will help you to make a better, smarter, more guided decision on whether or not it's right for you!
In the next part of this series, I'll be talking about using Angel Investors
and introduce you to Incubators
too (not not those things they put premature babies in), to Venture Capitalists
. You'll learn about what they are and how they can help your startup idea get started up!
Have you ever used a bank loan or bridge loan to fund your start up idea?
Was it all you ever needed to get it off the ground and off to a flying start?