Acquiring Funds for Your Startup Business: Leasing or Loans

 One of the most difficult issues for any business, especially a small business or startup, is how to raise funds for projects. Most of the entrepreneurial start-ups are born out of passion, and succumb to the rat race, only due to the financial crunch. That’s a prime reason; start-ups look for funding to bank on. But that’s not an easy stuff in any way. A startup business advisor helps you in getting a good funding from a reliable source such as banks, venture capitalists and government organizations so that you can use that potential to turn into something big.

This article discusses two of the most important sources of funds for startups -- leases and loans.

Leasing as a Funding Source

Many small businesses and startups prefer to lease property and equipment rather than purchase it, since it is cheaper and less risky in case the business fails. Professional firms help startups hire or lease equipment and provide funds for the purpose. This is a great way to keep your heads up during the tough times, believes the startup business consultants. Many companies are dedicated to leasing for businesses in specific industries. Therefore, whether you have an IT business, agriculture or manufacturing business, there is a lease-purchase firm out there ready to finance your business.

Apart from providing leasing and mortgages, finance companies also provide start-ups with information on other sources of funds. In fact, with the advent of the Internet, you can access information on many different types of funding with the click of a mouse. Most startup business advisors, this one are one of the safest ways to secure funding.  

Startups may face some initial difficulty in getting a business lease since most leasing companies prefer to work with established businesses. However, there is no reason to lose hope. There are many companies, who specialize in financing startup enterprises. With a little patient research, you will be able to locate some lease-purchase companies willing to finance your business. Many companies even finance individuals working from home, so you will find finance options even if you work from your home office.

Loans as a Funding Source

You can opt for short-term or long-term loans depending on your business needs. If you wish to finance short-term projects, then short-term loans are ideal. For acquiring assets, however, or for business expansion, a long-term loan might be your best option.

The principal amount of a term loan is based either on the collateral of what is being purchased or on the profits the business anticipates earning during the duration of the term. The term period may be anywhere from 1 to 10 years. One of the major advantages of term loans is that the interest rate is fixed. In a market where interest rates are rising, this is a highly desirable factor for the small business. No matter what the financial situation of the company or the interest rate market, the company will pay the same rate of interest on the loan principal.

Final Words

Before you sign with any financing institution for a loan, grant or investment, it is best to consult a startup business advisor who can tell you the pros and cons of each kind of loan. There are many flexible financing options available for start-ups today, and entrepreneurs need not give up on their dreams or ideas because of a shortage of funds.

Sometimes, you have a solid business plan and everything else is in place, but your understanding of loan options is not at its best. Many small business owners live with the impression that the only institution available to them for obtaining a loan is a bank. That's far from the truth because there are dozens of other ways to obtain the loan or investment for your start-ups that's much easier to manage than a bank loan. Some of the options available to you include small business loans from the government, invoice financing, business equipment financing loans, etc. If you are just a startup and none of those options seem viable to you, you can also opt for online fundraising, but make sure that you are seeking professional assistance from a  business advisor for startup before making a leap.