One of the several financing options Texas residents may use to establish their startup is their savings. Using their own money means that they will not have to hand over any equity in their business or have to accumulate debt. It can also be a good source of motivation, as they may take more effort to avoid unnecessary risks and to plan carefully than they would if they were using someone else’s money.
For people who do not have any savings set aside, they may try to see if they can raise cash for their business. This can entail selling off high-value assets, such as a secondary vehicle. They can also opt to wait to begin their startup until after they have built up sufficient savings.
Microloans, which are small loans, are another good source of initial financing for startups. The loans can be as small as just a few hundred dollars and are typically geared toward helping business owners who reside in underserved communities, have a limited work background or are creating a business that will benefit the community in some way. They are ideal for entrepreneurs who may require $5,000 to $10,000 to help start their business.
Banks and the Small Business Administration are additional sources of startup capital. However, it is very difficult for startup businesses to obtain a bank loan, even if it is guaranteed by the SBA. This is because banks prefer applicants to have a record that demonstrates business success and financial statements that verify that the sales are sufficient enough to service the loan.
A business law attorney may assist clients seeking financing for a startup by drafting and reviewing contracts with investors. The attorney might also assist with obtaining the appropriate business licenses and creating legal business entities.
