Blog Post

Entrepreneurs are something that this country definitely needs, and it is not an easy thing to do. In fact, only half of all startups will still be in business after the fifth year. This can be incredibly discouraging for many people and prevent them from ever trying to start their company in the first place. However, many brave souls continue to march forward despite this statistic and lunch startups every year.

To successfully launch a company, an individual needs to do a ton of things in preparation. Besides the basics of coming up with a great product or service and figuring out how to market it, creating a startup also requires the acquisition of a fair amount of money. Unfortunately, as almost everyone's parents have taught them at some point in their lives, money does not just grow on trees.

This means that thousands of people every year have to do some business banking in York to acquire the funding to launch their startup. Luckily, there are a few different options available when it comes to where an entrepreneur gets the money for their startup from. Here are the best ways that someone can fund their startup.

Get It From a Credit Union

One of the most obvious and best ways to get money to fund a startup is to visit a local credit union and get a business loan. Credit unions are widely known as offering fairly reasonable terms, which is extremely appealing to people who are getting ready to sink a lot of money into a company.

By opening up some loan accounts in York, an entrepreneur can help to get tens of thousands of dollars in money up front to make the necessary purchases for their company. It is important that an individual never takes a loan for more money than they can reasonably pay back. However, it is likely that the credit union will not give them one for an exceedingly high amount anyways, unless they come in with a business plan that is rock solid.

Since all the money that was acquired will eventually need to be paid back in full, including added interest, it is incredibly important that an entrepreneur is confident in their ability to operate their own company before accepting this type of money.

Use Personal Savings

This option is not a possibility for many people around the country. However, for a lucky few entrepreneurs, they may have done some smart online banking in York during their younger years and saved up a fairly large chunk of money. If this is the case, then one of the best options may be for them to use their own money to fund their startup.

The main benefit to doing this is that there is no one to pay back and no added interest on the money that is used. However, starting companies is not cheap, so it will likely require thousands of dollars to fund a startup. If a person is suddenly using a few thousand dollars of their own money, then this is likely to put somewhat of a strain on their personal life. So before they pull the trigger on using their personal savings to fund their start up, they should thoroughly think about whether they can afford to suddenly lose that large of a chunk of money from their accounts.

Take Out a Second Mortgage

Some people consider this a fairly drastic move to make, whereas others see it as a perfectly acceptable option. When trying to start a company, one of the ways in which an entrepreneur could acquire their funding is by getting a second mortgage on their house. This can usually be done by getting one of the mortgage loans offered in York, which are usually either home equity loans or a home equity line of credit. Both of these are viewed as a type of second mortgage, which can allow someone to qualify for large sums of money being lent to them. 

However, this is not something that should be done lightly, because it is crucial that the entrepreneur pays off their second mortgage. Just like with any other types of mortgages in York, a person's home is the collateral that the credit union takes in exchange for their large loan amount. So if the individual is unable to pay off their mortgage for any reason, such as their startup failing, then it could have very serious consequences such as the financial institution repossessing their home.

Crowdfunding

This is another option that is almost just as rare as being able to use their own personal savings. While crowdfunding has been steadily growing in popularity for the last few years, it is still largely reserved for very specific kinds of things.

For example, most crowdfunding campaigns are set up to help raise money for social causes or popular entertainment products. So for some specific startups, especially those that are involved in the entertainment industry, crowdfunding may be a very real option for them. However, for many other types of businesses that fall into categories such as plumbing, construction, healthcare, and other similar fields, the amount of people who would willingly give some of their own money to help establish their company is likely far less.

The great thing about crowdfunding is that it also requires no money to be paid back, which can help reduce the pressure put on the shoulders of the entrepreneur. So if someone is starting a company that they think would do well on a crowdfunding site, then this may be a good option for them to do.

At the very least, it can serve as a supplementary financial source that they can pair with one of the previously mentioned methods. Even if they only manage to get less than $1,000 from the crowdfunding campaign, this is still a significant chunk of money that they can reduce their loan amount by.