The second name of business is an enterprise or we can also say firm , the business is something which is involved in doing trade of goods and services or also of both to the customer. Money is considered as a tool that allows range of thought but without fear, business need money to make various decisions . To start a new project every entrepreneurs need capital because without capital business can’t b start. A business person initially have to get the business license to start the business for which he has to pay money in consideration. Basically there are two kinds of money which is used to start the business the owner’s money and the people’s money. A business person can also take loan from the financial institution and can also apply to fund his startup with other people’s money. For those who want to work with their own cash saving a startup investment is the best solution. There are places through which one can borrow money for his/her business these are:-
- PERSONAL SAVINGS :- The first way to arrange money is through one’s personal saving this is the mostly adapted method by every business man only one has to forgo a salary for a few months , or may b a year , till you gain the transaction and income flowing.
- FRIENDS AND FAMILY:-One can also take money from their friends and relatives but before doing this one should always sign the written consideration so no bad blood arises.
- BANKS AND CREDIT UNION:-The next best option is to lend money from financial institutions if you are familiar with or having a good , but the only thing which they want from you that you must have sufficient capital for your own to invest into the business.
- ANGEL INVESTOR AND VENTURE CAPITAL FIRMS:- Getting funds from investors can be prove high-wire dance but if you having a little soft shoe with great business plan than in that case it is not a big deal to get funds from them for business.
While giving loan there are many things which a lender will take into consideration , in the another words we can also them the “C” while checking the loan application these are :-
- CASH FLOW :-One’s ability to repay the cash which he is borrowing ,this measure will be completes by checking the cash flow that has been created by the person.
- COLLATERAL:- The value of those assets which one is willing to pledge in order to give assurance that he will repay the loan. A dollar amount will be placed on the assets and that will be compared with the amount of loan one requested.
- COMMITMENT:-It includes the amount of money that one is committing in his business , one can’t take the fund without contributing a fair share.
- CHARACTER:-One’s personal credit score along with the history of the financial institution, credit score will be calculated from the history of borrowing and repaying bank loans , credit cards and personal lines of credit. A lender will subtract one’s existing debt in order to arrive at a final amount , the main point which has to be noted over here is that the lender will check the credit cards , not the amount that one is using currently.