The difficulty of a startup is almost always funding. Sometimes however to have ideas, lacking the budget and this is a nd fo r the main reasons why there realized a large part of them. Financing a new business can be done in several ways, but one of the most common forms is getting a loan. Getting a loan to start a new business is far more difficult than taking a loan to continue your business. Newly-opened businesses do not have any financial history so that the bank can see whether it is worth funding your project or not. This is one of the reasons that before you start your business, you must have a well-designed plan in detail and save as much money as you can to have more credibility at the bank where you will apply for a loan.
Some of the steps that need to be made to get a startup financing:
- Write a well-designed and carefully designed business plan that will include well-designed financial statements. Banks or anyone else will not take your idea seriously unless you have well-crafted the business plan, especially the part of the financial plan.
- If you encounter difficulties in this part, you can seek the help of a private financier in order for everything to be compiled correctly.
- Be as trusted as you can and fix any inaccuracies. A business that has not yet started the operation does not have a self-reliance. This means that the bank’s decision to lend you will depend on your past transactions (borrowed money) and not what your business can do with that money in the future.
- When you go to the bank to look for a loan you need to dress more seriously, just as the type of entrepreneur you want to become, since the first impression that the borrower will create for you is of particular importance.
- It is preferable to take someone with you, for example. a business counselor, a lawyer or even a financier, because in this way you show that you have taken this matter seriously and can increase your chances of getting a loan. Business advisers are skilled and tend to clarify everything you do not understand about the loan you are taking, as usually lenders are not inclined to do so.
- When talking to potential lenders, be honest about your business plan. Lenders want to see if you have a plan that can be successful in the future. Prettiness and excessive optimism will make you look amateur, so try to be more serious.
Financing sources for new businesses include:
Loans from investors
This is considered the most difficult method for financing a new business. Investors typically have their own focused investment strategies for a period of 3-5 years. Also, investors often want to get involved in business activities and participate in decision-making.
- Investments by investors so-called “angels”
These investors are individuals with business experience, who provide investment capital for new businesses in exchange for business ownership. Sometimes these investors also make investments in lending.
Loans from friends or family
Loans from friends or family serve as one of the safest and most effective sources of finance for a new business. When financing is done by people we know, it is preferable that loan repayment dates be specified in writing to avoid misunderstandings in the future.
Grants for Small Businesses
The government and various donors provide grants to small businesses according to their strategies based on programs.
In addition to grants to existing businesses, there are also grant schemes that help small businesses with small amounts to facilitate business start-ups.
Such programs in Kosovo are provided and provided by various organizations and institutions such as:
- Ministry of Culture and Youth;
- Ministry of Trade and Industry;
- Ministry of Agriculture and Forestry;
- Relevant Municipality;
- Office of the European Union;
- International Organization for Migration (IOM);
- United States Agency for Development (USAID);
- MDA Foundation;
- Center for Business Support (BSCK);
- Kosovo Innovation Center (ICK), etc. ,.
Everyone who uses personal credit to finance business should take care that such funding does not affect its long-term personal stability. In case of business failure, personal life should not be affected by this type of financing.
Small Business Loans
Financing through bank loans is quite difficult given that commercial banks require the borrower to have a successful history of receiving and repaying loans in the past. Therefore, as a new business and as a new and unprecedented inventor of bank loans, the chances are too small to win the loan.