Ways of Raising Finance

Ways of Raising Finance
There are 4 Different types of funding

  1. Self Funding – The money is raised by you and your friends.
  2. Debt Funding - The money is borrowed from others.
  3. Equity Funding – It is raised by selling to others an interest in your business.
  4. Other Funding – gifts, grants etc.

Or to show them in another way, they come -

  1. From Private and Family - Funds from private and family sources
  2. From Debt - Borrowing money from others.
  3. From Equity - By sale of an interest in the business.
  4. From Other Sources - Other sources such as Trusts, Grants etc.

1. Private and Family Finance

  • Private Savings
    Here you will be looking at your own private savings and other family finance. In most cases the lender will want you to invest some of your own cash into the proposition if they are going to provide loan funds.

  • Friends and Relatives
    Friends and relatives are an important source of funding because they know you and should be aware of the potential opportunity that you have. Keep things formal and make sure that everything is documented with a proper loan agreement.

  • Other Private Sources
    Check out other sources such as your credit cards, cashing in your insurance policy, taking out a second mortgage on your home etc.