How can I get financial help when I don't have good credit and I don't know any rich investors?
I recently started a new tobacco company. I learned very quickly that my money isn't enough to advance. How and who can I talk to for help? I tried the bank but I have no collateral or good credit. Any advice?
Begin With Bootstrapping.
But if you’re looking to scale your business quickly, it can be advantageous to bring in outside sources of funding. So, what happens when your funds run out, or you decide you need something more? That will ultimately depend on the type of business you’re building, but there are some common places to start.
Consider Friends and Family.
Before you ask your friends and family for money, though, you should have a business plan at the ready. This way, you can explain to them exactly what you’re selling, what you plan on charging, how you’ll make money, and whether you’re asking for a loan, an investment, or a gift.
Explore Alternative Funding Sources.
If you’re looking for a relatively small amount of money (anywhere from $25 to $5,000), there are quite a few micro-loan organizations that lend to start-ups and entrepreneurs.
Another alternative is the increasingly popular crowd-funding sites, such as Kickstarter and IndieGoGo, which provide you with a platform to raise money from an individual, small supporters across the web.
Consider Taking Out Loans.
If you can show that you’ve started gaining traction and making money (and that a loan would help you earn even more), you may be able to qualify for a traditional bank loan.
Look to Angels.
If you have a tech start-up, you’ll probably eventually need more capital to really get going—to hire people or get office space, for example—than bootstrapping and crowd-funding will afford you.
In addition to making direct loans, angel investing groups sometimes host events or competitions that can help provide new entrepreneurs with additional networking opportunities. Check your local community for Angels.
Venturing into Bigger Capital.
If you’re looking for some serious funding (at least $1 million), you’ll need to turn to venture capital. Venture capitalists (VCs) are more likely to require an in-depth and airtight business plan, but they can also give you larger amounts of money.
Though it can be a long road to success, finding allies along the way (whether they’re friends, angel investors, or venture capitalists) to help keep your business afloat can make all the difference in the world. Good luck!
Richard, you are certainly right. Under such initial conditions, the best option is crowdfunding platforms. To enter into business relations with relatives (if he is not millionaires) is a bad strategy. Advertise your startup. It should look reliable for your future investors. Separate your personal and business accounts. Carefully list all your bank details, check incoming checks at least to avoid confusion.
You may also find this article, by a member of the Business.com community, helpful: https://www.business.com/articles/how-to-get-a-business-loan-with-bad-credit/
Why not try all the crowd funding sites?
Place an ad for investors.
Call all your relatives.