If you're just starting your business, you won't have profits to reinvest in your business. You probably won't have much in personal savings. It's also unlikely that you'll be able to get funding from lenders and investors. That means you're very limited in terms of resources: you'll get cash from anyone who will lend it to you and inventory, supplies, and equipment from vendors who want to make a sale. There are several ways you can borrow money, even under these conditions, and there are places you can use to get inventory, supplies, and equipment.
- Borrow against your home.
Many small business owners will take out a second mortgage on their homes or refinance their existing home mortgage to get money to start their businesses.
- Borrow against insurance policies.
Life insurance policies often have an option to borrow against any cash value the policy has built up over time.
- Borrow from friends and family.
The only people likely to lend you money during the earliest stages of business are the people who believe in you the most.
- Borrow from credit cards.
As a small business owner, you'll probably use your own credit and credit cards as a source of capital. This is the most common source of capital because it's immediately available.
- Borrow from Microlenders.
Microlenders offer small business loans between R700 and R175,000. Many local microenterprise programs offer the loans that other lenders won't and require a personal guarantee from the borrower.