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Bootstrap financing

mantalking30346145.jpgAre you planning to open your own business or would you like to expand your business? Bootstrap financing allows you to use your own money to pay for the expansion of your business and other things. Using bootstrap financing may be the only option you have available due to the high risk small businesses pose to lenders. Using bootstrap financing will reduce the dependence you have on traditional lenders to acquire the money you need to expand your business.

What are the bootstrap financing options you have available? Here are a few you can try using:

Savings account - this is the easiest way to acquire the money you need to pay for your business. Your savings account allows you to pay for the initial start up of your business or it will allow you to expand your business. Be careful about using all of the money from your savings account as this is pretty risky to your personal financial situation. When you invest all of your money into your business, you won't have anything to fall back on if the business fails and you don't have an income anymore. Try to repay yourself in a timely manner so you do have some cushioning to fall back on for your personal financial situation.

Trade credit - using trade credit is another wonderful way to finance your business. Trade credit allows you to acquire goods based on your company's ability to pay back loans. Your vendors will extend trade credit, which gives you up to 90 days to pay back the money you borrow to acquire the goods and services needed for your company. Depending upon the companies you are working with, you may need to offer a down payment at the time of the order or you will make your order using C.O.D (cash or check on delivery). Be sure to negotiate with a few vendors before you acquire trade credit from one source. Of course when you are dealing with trade credit, you need to make sure you can afford to pay the loan in a timely manner. Having a sustainable cash flow is one of the easiest ways to pay for trade credit.

Credit cards - many successful businesses were founded with credit cards. When you are using credit cards to finance your business you need to be very careful about how much money you are putting on the card. Is the card part of your personal credit or is it attached to your business credit? When it's attached to your personal credit, it will have a big impact on your personal financial situation and it may be hard for you to acquire future loans based on the amount of money that is being held on your credit card. Try to repay the money you are borrowing on your credit card as soon as possible in order to improve your credit situation and to avoid running your personal credit. Watch the interest on your credit cards as well as it can impact the manner in which you will be able to repay the loan.

Angel investors - another wonderful bootstrap financing option you have available is to use the help of angel investors. These wealthy individuals will offer you financing for your business based on your need and the business. Angel investors will see some sort of potential in the business and they will have a given interest to see the business become a success. Many of these angel investors will take a risk on your business when traditional lenders won't as they see that there is some type of potential with your company.

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