The costs of starting a business are often higher than we can afford with our own funds, without having to resort to external sources of financing. Turning to “financial help” from third parties is quite common, but what kind? There are many options.
Company Creation
Tags: Companies , SMEs , Self-employed , Startups
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Depending on the business situation you are in – the phase of the project and what you need the money for – you can choose which type of financing to use. Below we have compiled a list of which ones they are and what they consist of:
Self-financing or own financing: this is the basic source of financing, using one's own financial resources. Furthermore, if you don't believe in your idea enough to invest in it, it's hard for anyone to do so: investors demand commitment and consistency. It's difficult to trust the idea of someone who hasn't invested in it with their own financial resources.
FFF: the acronym for “friends, family and fools”. This is another mexico phone number of the most popular sources of funding. “Close friends” and those closest to you may be more willing to take risks and support you without demanding so many conditions and guarantees of profitability.
Through banks: There are various types of bank financing sources, such as loans, credits and microcredits. These are amounts of money that are lent with a certain interest rate that must be repaid within a set time. The difference between a loan and a credit is, basically, that in the former, the bank lends the money at the beginning of the operation, and the interest – which must be repaid monthly or annually – is applied to the total; while in the case of a credit, you can obtain the amount you need at any given time during the established period and the interest is applied only to the amount used, although the percentage is therefore higher.
A microcredit is a type of loan that is granted to people who do not have sufficient guarantees to access a traditional loan; its amount can reach up to 25,000 euros.
Within this type of financing it is also possible to include ICO (Official Credit Institute) financing lines, which can be processed in most financial institutions.
Crowdlending or social lending or peer to peer lending : in Spanish, a loan between individuals. It consists of obtaining a loan from other investors as is done with a bank, with the difference that it is done without bank intermediation and the interest is higher. It is usually used in cases where the entrepreneur does not meet the requirements to access a loan.