Digital businesses are on the rise. From gaming apps to e-learning platforms, there are many opportunities in the digital space. Funding a business idea can be as simple as cash flowing your e-commerce store or as complicated as getting a loan and web developers involved in creating your product.
Starting a legitimate business with your local town or state is the first and most important step. With this, you may be able to apply for credit and other business loans. Credit cards are great for buying things, and might be just what you need to start your digital business. Here are some other ways to quickly raise money without having to wait months for it to come back in the form of profits or interest payments on loans.
Use a Business Credit Card
Business credit cards are usually effective for a digital business startup because it keeps your personal money and liability separate from your business. Many digital businesses don’t require a physical location which can cut down on startup costs. They can also be easily scaled by leveraging digital product services and paying for services over time instead of in lump sum payments. This gives the business time to start bringing in revenue which can then be used to scale the business and pay off the initial debt. You can often find business credit cards with great introductory offers including low-interest rates, no annual fee, and even some cash-back options.
Borrow From friends and family
If you have a good relationship with your family and friends, then this is a great option for funding your business. You can borrow money from them through a personal loan and pay it back over time with very low interest compared to many business startup loans.
However, there are some downsides that you need to be aware of. If you fail to repay the money on time or at all, it may damage the relationship between you and your relatives. Your family may or may not want interest and it can cause strain if your digital business isn’t going well just yet.
Take Out a Personal Loan
If you’re looking to fund your digital business idea and want to consider personal loans, here are some things you should know:
Personal loans are unsecured. If a lender decides that they don’t want to give you the funds for whatever reason, there isn’t really much protection for them. This means they typically have very high-interest rates so it can take time to repay the loans.
Personal loans can be used for any purpose. While most lenders require some sort of documentation showing how the money will be used, it’s still possible to use this type of loan for just about anything.
Get a Peer-to-Peer Loan
Peer-to-peer lending is a new way to borrow money. Instead of going to the bank, you can get funding from an individual investor through an online platform. You set up a profile and explain your business and financial background, then you get matched with lenders who are willing to fund your loan. The interest rates are usually lower than what you’d pay at the bank or credit union, and the application process is much easier because there aren’t as many hoops to jump through.
Find Angel Investors and Venture Capitalists
Angel investors are wealthy individuals who invest in start-up companies. They may be looking for a return on their investment or they may simply want to help the company succeed. They often have multiple projects ongoing to give them a return, but their primary focus is on businesses they want to see thrive.
Venture capitalists are companies that invest in start-up companies. VCs look for certain things when deciding whether or not to fund a new business, such as how much money the company will make and how quickly it can do that. The goal of both angel investors and venture capitalists is one of making money from their investment — they’re looking for a high return on investment, and sometimes a passion project or two. They are both excellent options for your digital business ideas, especially apps and other technology ideas that have a great use case.