Tips on Avoiding Loan Capital for Starting a Business

Did you know that currently borrowing money is no longer a taboo subject because most businesses will not work without capital and capital limitations can also hamper the business process. In other words, the issue of lending and borrowing has become a necessity both for individuals and on behalf of business entities and companies.

But if you are a beginner in the field of starting a business maybe you should understand some important points first before deciding to make a loan application proposal to start your business. Because there are still many business choices that you might press for in terms of capital so you don’t need to apply for loan capital from third parties such as banks or multi-finance institutions.


Use the existing capital first

It is important for you to determine what business you want to start. It’s best to choose the type of business that really suits your interests and keep in mind also market trends whether the type of business you choose has good prospects. After that, determine the amount of capital needed and calculate the capital that you currently have. To avoid loans, the following things you can do:

  • Using personal savings that already exists
  • Sell ​​existing assets that are not primary assets. For example you have two houses, sell one of them or you have a car but also not a priority asset you can sell and use the capital to start a business.

That way you don’t need to borrow money from other parties anymore.


Borrow from the closest person if possible

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If possible you can also apply for loan capital to the closest people such as relatives or friends. Because borrowing from the closest person does not usually require loan interest so your installments will be lighter, but of course the commitment and principle of mutual trust needs to be chosen because if you are absent, not only lost money but also friendship or friendship can be interrupted. Besides borrowing money from the closest person cannot be done in a long period of time, a maximum of several months or one year depending on the agreement.


Look for Possible Join Venture If Capital is Less

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If you already have capital but are still lacking, try to look for possibilities to do business with a joint venture system. This can be done with relatives or close friends, but everything must be done according to the agreement so that the division of tasks and benefits is clear and not confusing. Both parties are aware of their duties and obligations so that they do not accuse each other in the event of a dispute later. Because in an effort made more than one person differences of opinion will often occur.


Look For Possible Businesses Through Franchise Systems

Look For Possible Businesses Through Franchise Systems

The franchise system is also highly recommended for those of you who are looking for business but have limited capital problems. The franchise system allows you to do business without capital because usually the franchisor will bear all the capital and assets so all you need to do is run the business.But it should be noted that for greater profits choose a franchise company that is already large, has a good reputation and products that already have their own customers.


Possible Capital from Consumers

This is common if your line of business is carried out on a project basis. Suppose you open a garden landscaping business because that is where your expertise is. Because you don’t have the capital, you can ask your customers to pay a percentage of the down payment that you can use as new venture capital and then after the job is finished your customers can pay off the rest of the payment. So you don’t need to apply for any loan capital .


Looking for sponsors

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Looking for sponsors can also replace the capital money you need. But not all types of businesses can use this method as capital.

Applying for loan capital is indeed the fastest way so you can get capital to start a business, but that is not the only way. The six points above might be your additional consideration before deciding to submit a loan proposal. Whatever the type of loan or how small the interest on the loan, borrowing from a third party always has a risk, especially for those of you who are still cloud in terms of financial management.

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