3 Ways To Raise Your Business Capital
September 6, 2022
What are the ways to raise your business capital?
- Borrow money from your family or friends
- Acquire a business loan from a bank
- Take out your personal loan
Today’s generation is highly motivated to start their own businesses — they’re empowered by new tools and technologies that make owning a business easier now more than ever.
However, finding capital for a business is still a challenge for many aspiring entrepreneurs.
So if you’re looking to start a business, there’s one thing to focus on first, and that’s finding ways to raise business capital. Read on to find the different ways to do so!
Borrow money from your family or friends
The easiest way to raise your business capital is to raise money from your family or friends. The most popular way to do this is by borrowing from trusted people within your circle. This may be easier than going to the bank for a business loan, as this process comes with tons of paperwork, processing, and requirements for you to be qualified for one.
However, if you’re planning to use this method, we recommend doing so professionally. This means taking every step necessary to guarantee you pay them back for their loan, and avoid further money issues with your friends and family.
To do this, try creating a payment schedule to pay back your loans. List down every cent you pay from the borrowed capital, and make sure you have receipts in case the other party has lost their payment record.
Acquire a business loan from a bank
If what you can get from your personal funds, friends, and/or family is limited, then you have to consider loaning your capital from a financial institution — such as your bank.
Here are the two main types of bank business loans that a lot of aspiring and current entrepreneurs in the Philippines are taking out:
Term Business Loans
This type of business loan is offered by banks. A term loan is a monetary loan, in which you have to make regular repayments to them within a specific time frame agreed by both parties. This can have fixed or variable interest rates, and can be secured (needs collateral) or unsecured.
A credit line is a short-term loan, in which a bank creates a credit limit to represent the maximum amount of money that you can borrow from them. You can use and access the money for whatever purpose, and pay interest on the amount that you have used only.
Take out a personal loan
Personal loans are not only for personal expenses, but they can also be used to raise some extra capital for your business! This is the ideal type of loan if you only need some more money to start your planned business.
These are the multi-purpose financial products that you can consider for your personal loan:
- Private lending institutions
- Microfinance institutions
- Credit card companies
- Social Security System (SSS)
- Government Service Insurance System (GSIS)
- Home Development Mutual Fund (Pag-IBIG Fund)
- Department of Trade and Industry (DTI)
- National Anti-Poverty Commission
This can also be secured or not, and the terms and interest rates are dependable on your personal income.
There are many ways to raise business capital. The right one for you depends on your resources, risk tolerance, and financial capacity.
That said, planning for a business in the Philippines is difficult. If you’re an aspiring entrepreneur looking for some help with your business, check out the rest of our blogs, or contact us today!