Ways you can get Capital for your Business

Dictionary.com defines capital as wealth in form of money or other assets owned by a person or organisation or available for purposes such as starting a company or investing. Businessdictionary.com defines capital as wealth in form of money assets taken as a sign of financial strength of an individual organisation or nation and assumed to be available for development or investment.

Capital In Business

The key thing I want to bring out in these definitions is the word ‘assets’. Capital in business goes way beyond money. My friend in the situation above having no money assumed she had no capital. Now that is an error many entrepreneurs commit.

Capital for entrepreneurs comes in five variants: mental capital, relational capital, financial capital, reputational capital and educational capital.

Mental capital

Mental capital is the most superior form of capital the entrepreneur should have. This mental fortitude is what helps you navigate the murky waters of entrepreneurship. The greatest entrepreneurs have this. This is how the likes of John D. Rockefeller, JP Morgan, Mike Adenuga, Tony Elumelu, and so on, built massive wealth. It is a never-settle-for-less, failure-is-not-an-option, impossible-is-nothing mindset. This form of capital pushes you to keep going where many would have given up.

This capital comes from two sources – learning and experience. Learning through books, courses and trainings develops you mentally. Going through and surviving bad experiences also boost mental capital significantly. You suddenly are confident that if I survived that, then this is no barrier for me. Mental capital was what I applied to my friend’s N300K financial capital challenge. By the way she turned down my offer.

Relational capital in business

When I was going to start my first business that I needed an office space for, I went to two uncles who had offices in business districts. The first said no; the second allowed me to use his office boys quarters. That same space would have cost me about N500,000 in rent every year. But I got it for free because of relational capital.

I know a man who imports generators from China. The Chinese manufacturers give him ten containers of generators on credit. He sells and then remits money to them. Even with his modest estimates, ten containers will cost him twenty five million naira.  Protect your relationships, especially with family and close friends. They are your biggest allies in your early days in business.

Reputational capital

While relationship capital might have opened the door for the man who imports generators from china, reputational capital has sustained him. Reputational capital takes you further than relationship capital.

Your reputation in business is everything. It is your most dominant and consistent behaviour. Your staff see it, customers see it, your suppliers see it and your competitors also see it. You build reputational capital by being consistent with the right values and principles and should you have bad reputation, simply commit to acting consistently with right principles.

Educational capital

The young boy who works as an apprentice for three years before setting up his business, the guy who goes to pursue his master’s program in a particular field, or a woman who takes a six-week crash course in makeup artistry, baking, etc. are all building up educational capital to be deployed in their business. Building educational capital should be a lifelong commitment considering the rate of change in many industries today.

Financial capital

It needs no introduction; it is the only type of capital known to many. This is cash, and they say cash is king. True, cash may be king and the other forms of capital are also king makers. Cash is the fuel that powers the engine of your business and its importance cannot be overstated. Plans remain exactly where they are on paper without the cash to push them to reality.

Anyone who tells you money is not important in business does not tell you the whole truth. It is important but you shouldn’t also believe anyone who tells you money is the only thing that is needed for you to be successful in business.

As important as cash is, one should not get locked into looking at business expenses from a cash only paradigm. There are alternatives to cash and there are things you could exchange value with when you don’t have cash.

Never get scared to offer alternatives to cash when you don’t have cash. What do you have to lose anyway? Propose differed payment or installments or direct exchange of product and services. In exploring options, you draw on your mental capital which in my opinion is the most important form of capital an entrepreneur needs to succeed.

Ted Turner the founder of CNN was asked what he would do if he lost all his wealth. He said he will make double back in half the time, starting with nothing. That is a guy with massive mental capital. Capital isn’t money in the bank, it is your mindset and the knowledge you carry in your brains. The deposits you make in those places will allow you make withdrawals of cash.

8 Ways to Get Money to Start a Small Business

1. Savings

Most startup founders use their personal savings to fund their businesses, according to Forbes.

That said, don’t drain your bank account to raise funds for your business. Entrepreneurs should set aside enough living expenses (for for rent and groceries, for example) to last them for a year. This is because many startups aren’t profitable for months after opening.

Smaller, service-based businesses can probably get away with three to six months of operating expenses, according to FreshBooks.

The SBA has a number of tips for saving up to start your small business, including:

  • Decrease credit card debt. Call your bank to request a lower interest rate.
  • Set up an automatic deduction to your savings account.
  • Get rid of any services you don’t use like gym or car-sharing memberships.
  • Set up a budget using a service like You Need a Budget.
  • Buy used. This includes your car and any other purchases. Look for Facebook groups in your area focused on trading or selling used items.

2. Personal Loans

This tactic involves borrowing money from family and friends. To avoid hurt feelings, put the terms of the personal loan in writing. Be clear about how much you need, what the interest rate is and when it’ll be repaid.

3. Credit Cards

You can either use your personal credit card or open a business credit card.

Even if this option is open to you, don’t choose it lightly. Credit cards often have high interest rates that increase your balance monthly. You could end up with a debt balance much higher than you planned for, which could cripple your new business.

Still confident credit cards are the best route for you? Make sure you’re using a card with the lowest interest rate possible and excellent repayment terms. Research Credit.com to find the right card for your business.

4. Bank Loans

Unfortunately, a small business bank loan is not guaranteed. Banks want airtight businesses plans and excellent credit scores before they’ll consider approving a small business loan.

They may also want you to invest your own money in the business to prove you’re really committed to making your company work.

You can go with your personal bank since they’ll already be familiar with your banking history. Or choose a bank that’s historically known for lending to small businesses. To improve your chances of getting a loan, choose an SBA-guaranteed lender.

5. Venture Capital and Angel Investors

Venture capital and angel investing is best suited to high-growth companies or companies that are already profitable with good cash flow. Still, each investor has his or her own specialty in terms of region, industry and company age.

In any case, you’ll need a unique idea and a solid business plan to attract their investment. The SBA can help match you to potential private investors through their SBIC program. Investments are typically made over a three year period.

SBIC investments comes in three forms:

  1. Loans. SBIC loans range from $250,000 to $10 million, which must be paid back (with interest). Interest rates are 9 to 16 percent.
  2. Equity. SBIC will give you money for your business for a share of ownership (and control). Investments range from $100,000 to $5 million.
  3. Loan and Equity. A combination of the first two options. Loans come with interest rates of 10 to 14 percent and investments are $250,000 to $10 million.

6. Government Programs

Government grants can require some research to find the right one for you. Thankfully, the SBA has offices all over the United States that can coach you on available grants, plus provide business consulting and training. Grants.gov also has information on over 1,000 federal grant programs.

There are also small business grants available to entrepreneurs facing unique barriers. For example:

7. Corporate Programs

Select corporations offer programs that support small businesses, including low-interest financing. For example, Goldman Sachs has a program that gives affordable loans to businesses who might not qualify at traditional credit sources.

8. Crowdfunding and Crowdlending

Crowdfunding usually involves asking large groups of people for funds on dedicated crowdfunding websites. They usually receive a gift or the product you’re developing in return for their investment. Crowdlending functions much the same way except that your funders expect you to pay them back.

Here are some options:

  • Kickstarter: the most popular choice. You add project details, your funding goal and deadline. You can then email family and friends with your page link. Payments to you are made via credit card. If you reach your goal, Kickstarter takes 5 percent and Amazon (Kickstarter’s credit card partner) takes 3 to 5 percent.
  • Indiegogo: an alternative to Kickstarter.
  • AngelList: matches you angel investors.
  • Kiva Zip: ask for small loans with zero-percent interest.
  • Accion: loans usually have an 11 to 16 percent interest rate, plus additional costs.

How Can I Start My Own Business with No Money?

To start a business with no money or very little startup costs, consider these options:

Service-Based Business

Starting a service-based business that’s run primarily over the internet is cheap to start up. Creative services like graphic design, software or app development or copywriting just require a computer and are essentially free to start up. Other ideas include photography, fitness coaching and house cleaning, though you’ll need equipment.


This hot business idea means that you sell products that are made, stored and shipped by a third party such as Alibaba. You can set up your own low-cost online store using sites like Shopify. You then curate the products sold and focus on marketing and excellent customers service to make your shop stand out.

You use products from third parties and customize them with unique slogans or art. T-shirts, mugs, tote bags, cell phone cases and hats are just some of the items you can customize. Not a designer? Hire one for cheap on sites like Fiverr.


It’s simple and free to publish your own eBook or print book using services like Amazon and Draft2Digital. You can hire people to format your book or design covers on Fiverr and even hire ghostwriters on Freelancer.com.

Digital Products

Design courses or templates or produce music or graphics that can be downloaded. You can sell digital products on Shopify, as well.

How Much Does It Cost to Start a Business?

It costs about $3000 (or less) to start a small business, according to the SBA. These businesses are usually home-based, run by one owner and have few startup costs.

Home-based franchises cost between $1000 to $5000 to start, though retail franchises may cost a lot more.

How Do I Qualify for a Business Loan?

To qualify for a business loan, Forbes recommends a small business owner needs:

  • Good credit score. Get your credit score and then follow these steps if you need to improve it.
  • Enough cash to cover outstanding loans. Your existing cash must cover not only debts and loans you already have but the new loan as well.
  • Strong assets.You’re more likely to qualify for a business loan if you have enough assets (such as cash and accounts receivable—or money owed by your clients) to cover the loan should you default.
  • Several years in business. This isn’t a given, though. There are funding sources that cater to new businesses.
  • Correct financial statements. Lenders may prefer accountant-reviewed financial statements. You’ll need a complete and correct balance sheet, income statement and cash flow statement.

How Can I Get a Small Business Loan without Collateral?

Loans backed by the SBA typically don’t need collateral (i.e. property or assets like cash). The SBA guarantees these loans instead so even startups can access funding.

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