Top 4 Sources of Growth Capital for Entrepreneurs
When you’re business is growing, so is your profit. Unfortunately, as an entrepreneur, it can be difficult to figure out how to get the growth capital needed to further expand your business’s reach. Luckily, there are a few ways to get money for your business and they’re probably a lot easier than you think.
Here are the top four sources of capital for entrepreneurs:
- Angel Investors
An investor is someone who gives money to your business in exchange for staking ownership in your company. An angel investor is an individual who funds a business because of his/her particular connection with a business, cause or industry. Oftentimes, these investors may have been a savvy entrepreneur at one point themselves while others are simply looking to benefit financially by committing to something that also brings great fulfillment.
- Venture Capital Firms
Venture capital firms are also investors, but are not exclusive when it comes to funding growth capital. They are generally agencies or businesses with more than one person contributing to your business.
Both angel investors and venture capital firms come with a major advantage: the business owner is not liable to repay the investment. This is especially helpful in case your business hits hard times or takes longer than expected to turn a profit.
Usually this growth capital source is the most dreaded for entrepreneurs. Interest rates that are high, especially among commercial lenders, can loom over one’s business. If your business is ever faced with unfortunate circumstances, the loan obligation may serve as a serious obstacle for growth. This is why it is best to stick with non-traditional institutions. You can find such lenders online or in local community directories. For more favorable interest rates, look for credit unions and similar private lenders or institutions.
The least risky source to grow your capital comes from yourself. As a business owner and entrepreneur, it’s important to believe in what you’re offering your clients. If you’ve not done so already, look into different savings or business accounts that offer annual interest yields. Just like loans, sticking to non-traditional lenders will usually get you the most competitive rates. By offering up your personal dollars saved, you’re showing investors – and yourself – that you’re serious about your business. Plus, using your own money is a strong way to hold yourself accountable for the success of your business. Investing in your own business also speaks volumes to investors, if you should go that route one day.