Posted August 05, 2015 by

Top 5 Most Effective Ways for Recent Graduates to Fund their Startup Businesses

approved small business loan application and dollar bills

Approved small business loan application and dollar bills. Photo courtesy of Shutterstock.

If you are a recent graduate and striving to setup your own startup business, there are a number of ways which can be used to collect money but you still need to be sure what kind of funding method will really suit your business type. Though, it is not a rocket science to understand available options, it is quite crucial to analyze your business from all angles to bring it on its feet. You might have a really great business idea but you should always remember that just one mistake can take you away from lots of funding opportunities and therefore, you must know what you actually need to do at this stage. Some available options for recent graduates to fund startups:

Option # 1: Crowdfunding

The latest way of getting funds for business ideas is Crowdfunding which has become quite popular among the people because of its effectiveness as you can easily run an online crowdfunding campaign and grab the attention of the people. There are various platforms where you can go and seek for sponsors such as Indiegogo and Kickstarter. There are thousands of people out there who are interested in contributing their money in new businesses to help them grow.

When you go to crowdfunding platforms, you will see that entrepreneurs publish their business detailed description along with financial strategies that explain how they will be turning crowdfunding in profit. They target a specific audience who explores about the businesses they are interested in. If they find an idea attractive, they may decide to help it with their money and in the response, they may be offered pre-buying of the products or some special rewards such as an iPod or a Notepad etc.

Option # 2: Small Business Loan

If you are not interested in a crowdfunding option, you may also look for bank loans which is a traditional method and has been very specialized because of growing needs. A variety of options are available at banks such as Microloans for small business which is quite attractive but when you choose this option, you must figure out how you will be meeting a tough deadline to return the loan to the bank.

Secondly, when you are visiting a bank to get microloan, you must tell them in detail that how you will be using their money and even if you give them all available information, they may reject your request only because you are going to start your small business for the first time and the bank is not ready to put its interests on risk. If you have to go through, this kind of disappointing situation, you might also look for other small business loan providing companies.

Option # 3: Venture Capitalist Investor

Venture Capitalist Investor is basically a company that supports startups through funds. You can easily understand when a professional group comes to help a small business, the chances of getting a lot of funds are greatly increased. Most of new small business owners find this option really attractive because in this way they can get enough funds for their business.

Before you decide to go for this option, you should also go through its downsides which may stop you from adopting this particular option if they are against your interest or the way you do business. Normally venture capitalist investors prefer to support more stable businesses that are run by a professional people so they don’t have to lose their investments. Secondly, you might have to make compromises over your interest and if you are not ready to do it, this option is not ideal for you.

Option # 4: Angel Investor

Another great option is Angel investor which is quite similar to the above option but the difference is that it is a smaller business operation and sometimes even run by one person who offers his/her funds for small businesses. Angel investors find lots of attraction in funding small businesses because they are promised a large portion from the profit of the company which simply means if your company earns more profit, your investor will also make more profit.

This is really a great option for those investors who want to earn mentorship whenever needed, earn more profit with the growth of the company and a bit more control over the company. There are various online places where you can find Angel Investors and convince them to invest their funds in your business and some of the popular places are Gust, SBA and Small Business Development Centers.

Option # 5: Credit Cards

The last option is the use of your credit history if you really have an outstanding history. You can use your credit card to get funds for your startup business. Special credit cards are also created and offered to entrepreneurs who can visit their banks and discuss possible funding options for them. Though, this funding method may not be useful for everyone, you can still use it effectively if you know how to get maximum benefit from it.

Final Words

The above discussed are the most popular options for startup funding and a large number of entrepreneurs have turned their small businesses into giant business groups through small funds, however, there are various other options such as government grants, sweat equity and self-funding.

Author Bio:

Marry Berry is a student counselor as well as small business consultant based in UK. She has helped hundreds of college students and recent graduates not just in their studies but also in their practical lives. She is also an experienced academic writer at max desertation help.

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