How to Fund Your Startup Without Going Broke

by Startacus Admin
Ah, startup funding. For many, their absolute worst nightmare, one that is out to get their wildest dreams and tear them, limb from limb.
In a world where we’re often told it takes money to make money, and that a penny saved is a penny earned, gaining access to said pennies is often easier said than done.
After all, everyone who’s already been through the grinder and made it through, with their business successfully funded, should take better care than to offer unhelpful

So let’s focus on palpable ways to fund your startup without going broke.
Bootstrapping
This is the funding option that most often leads to going broke.
No matter how brilliant your business idea is, how confident you are in your skills and drive, funding your venture on your own is not always the best choice.
Things outside your control can interfere with the way things are running, and you may end up facing setbacks you could not have predicted. That’s when having zero savings can hit you hard.
Unless you have an additional savings account for unexpected life expenses, or are completely sure you can invest what you need in your business without it having a detrimental impact on your life, try to find an alternative way to fund your startup.
Lines of Credit
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You can take out a line of credit either at a bank or through an online lender. The latter often requires less paperwork and it’s a more accessible path, but it may come with higher interest rates. Whatever you opt for, make sure you read the fine print and research your lender carefully.
What makes a line of credit a viable option is that the sum of money you require will be readily available (much like with a credit card) and can be accessed when you need it. The interest you pay, on the other hand, is based only on the amount you do end up withdrawing, and not the total amount of credit.
If you’re looking for a financial safety net, or might need to have cash available, a line of credit can be an excellent option.
Short-Term Online Loans

If your business is going through a slump that an injection of funds could rectify, an online loan can be just what the doctor ordered. For example, there are companies that can get you access to a cash influx in less time and with more acceptable interest rates, even if you’ve previously taken out a loan or have been in debt before.
On the other hand, throwing good money after bad money is not the best way to deal with a financial hemorrhage. So if you’ve made a bad investment and pouring more money into it won’t make things right, cut your losses and move on.
Merchant Cash Advances
A merchant cash advance means selling a percentage of your future credit card income. While it might sound a bit dodgy, it’s actually a legitimate way to access the cash you need.
There are no fixed payments involved in merchant cash advances. Instead, your lender will take a percentage of your daily credit card income.
If you deal with a lot of credit card transactions, this can be an easy way to get the necessary funding. On the other hand, you need to be ready to face the drop in everyday income.
If what you need is funds to pay for new equipment to increase production, or for the salary of a new employee who can help you deal with an increased workload, an MCA can be the best option. In other words, it’s a good choice if the results of your cash advance will be increased sales.
On the other hand, if you’re uncertain of your future income and would struggle with a percentage being taken off the top every day, MCAs are not for you.
Wrap Up
Whichever option you choose to fund your startup, make sure you carefully explore all the other ones as well. After all, the startup world is nothing like it was a mere half a decade ago, and funds are more readily available to all kinds of small businesses across many industries. All you have to do is some legwork, and find the best option for your particular niche.
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Published on: 21st January 2020
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