Starting a new business can be an expensive process, with many new business owners struggling to cover unexpected costs. Securing finance for your start up can be difficult, particularly if you have no experience running your own company. But don’t believe all the start up funding myths that you hear.

However, with perseverance and a good business plan, there are plenty of options available. Here are five funding options for your startup.

Crowdfunding platforms, such as Kickstarter, GoFundMe and Seedrs are increasingly popular with first-time business owners looking for financial help to get their business up and running. There are different types of crowdfunding, such as equity and product crowdfunding, so you will need to research the options thoroughly to make sure you understand the terms and conditions. Some crowdfunding schemes act as a loan that will need to be repaid, while others will give investors a stake in your business.

Bank Loan
New businesses often seek startup loans from banks and other financial institutions, as they are often considered to be the most trustworthy option. However, in recent years, it has become increasingly difficult to get a new business loan from a bank, particularly an unsecured loan. Most banks require applicants to offer some form of security, such as property or other assets, although this will depend on the amount of money you want to borrow. If you are considering applying for a bank loan, you will need to provide a viable business plan that contains as much detail as possible, including a market research report, marketing plan, product information and financial projections.

Peer to Peer Loans
Peer to peer loans offer competitive interest rates for people looking to start or expand their business. Websites like Funding Circle, Ratesetter and Zopa help to connect borrowers and lenders, although you may have to pay an introduction fee. The website will usually perform a credit check and you will need to prove that you have enough income to cover the repayments. Interest rates vary greatly from one platform to another, so it’s important to research and compare the different platforms available.

Angel Investors

Angel investors, also known as seed investors, private investors or business angels, are usually wealthy individuals or sometimes groups that invest money in new or established businesses. Angel investors are great for businesses that need a large amount of money upfront, but you will need to consider the terms and conditions of the investment carefully, as angel investors will hold a stake in your company. You can use networking websites like LinkedIn to find investors, or you can use dedicated websites that help to bring investors and borrowers together.

Personal Resources
If you have a viable business idea that you believe will work, you might decide to self fund your start up. Credit cards, savings accounts and selling some of your possessions can all help to raise the money needed. Asking friends and family for a loan can also help to raise extra funds. If your business will have a positive impact on your local community, you may be able to organise a fundraising event or get local businesses to sponsor your company.

There are many different ways to fund a new business, including bank loans, peer to peer loans, angel investors, crowdfunding and using your own personal resources. However, it’s important to read the terms and conditions carefully, as interest rates, repayment terms and other legal conditions will vary greatly. When accepting a loan from a friend or family member, it is equally important to draw up a legal contract, as this will help to prevent disputes.

Have you tried any of these funding options for your startup? What worked for you?

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