Raising Business Capital

A good idea along with using your personal credit is to leverage it into obtaining a business credit card. Even if it has a small opening line of credit, this is helpful. Use the credit card to make your business purchases, always stay current on your payments. The importance of staying current is critical, as this is how the business will build its own credit rating. Ideally pay the balance off as quickly as possible and keep the line of credit available. As the business develops overtime it will develop a track record of revenue, and demonstrate a history of paying its bills; thus, it will become more credit worthy. The small business credit worthiness works very much like your our own credit rating. Know where both stand.

Another source of capital, if the banks are not an option, is to borrow money from friends or family members. This is fraught with potential trouble. Mixing business and money with friends and family can put all of those relationships at risk. Is it worth putting a friendship at risk? But, this is an age old method of raising money. If this is an option, it is best to clearly layout the terms in writing. Treat this money like a bank equipment loan, and put together a contract, so everyone knows what to expect. When involving friends or family, make sure to clarify if the money is a loan, or a partnership. This is critical. Loans and partnerships are very different things, makes sure this is clearly defined.

Another method of raising capital is to seek out investors. There are people out there looking to invest in good business ideas, these folks are known as venture capitalists. If you have a good idea, and a really well thought out and well written business plan you may well be able to attract the attention of investors. This becomes completely engrossing endeavor.

Raising money for your small business is one of the most critical steps in launching the business. When done well, it set the business up for success.