How To Raise Money For A New Business Philippines: So you’ve got a new business idea, and you’re ready to get the process moving, but there’s only one problem, and that is money. So how do you raise money for a new business in the Philippines? Today we will be exploring the complete list of your options when you are looking to raise money for a new business in the Philippines.
Additionally, we have included a unique section of additional tips and tricks for business owners looking to raise capital for a new business in the Philippines.
How To Raise Money For A New Business Philippines
1. Angel Investors
Angel investors are perhaps one of the best methods available if you are looking to raise business capital. So why is Angel investing a unique opportunity? First, Angel investing is a way that entrepreneurs can connect with experienced investors. In other words, teaming up with an Angel investor helps your business financially and can also aid in your business development.
However, some Angel investors prefer to be silent partners, depending on the agreement. Previously we have explored a full guide of Angel investing in the Philippines and spoke about how you can use this service to raise business capital. Therefore, I have linked to this full guide above for your reference.
2. Friends & Family
When you are in a tight spot in life, you always have your friends and family, which is one reason why seeking financial support and business loans from your friends and family can be very useful. one of the added benefits is that negotiation is open. Most individuals will borrow money without any interest, which is beneficial in starting a new business.
Even though our friends and family are different from borrowing from the bank, it’s still important that terms and conditions are agreed upon and acknowledged. Remember, you may need to borrow money from them again in the future if you are looking to expand, so it’s always best to remain on good grounds.
Apart from how to raise money for new businesses in the Philippines, one of the most common questions we get asked is – what is the difference between crowdfunding and Angel investing? Crowdfunding tends to include hundreds and sometimes thousands of investors. On the other hand, Angel investing tends only to be a small handful of individuals.
Therefore there are many pros and cons to crowdfunding in the Philippines. Like Angel investing, crowdfunding is not suitable for every type of business. However, it is a great way to raise business capital in the Philippines without collateral. Thus, crowdfunding or similar options may be appropriate if you are looking for a business loan without collateral in the Philippines.
4. Private Business Loans
Private business loans are also a great way to raise business capital in the Philippines. However, similar to other options on today’s list, it has many pros and cons. This may be a suitable or less suitable option depending on the type of business and your financial situation. For example, some business lenders can have fairly aggressive interest rates, eliminating potential business profits.
When searching for private business loans or small business loans, it’s always best to carefully calculate your repayment terms, looking at the loan requirements, terms and conditions, and other important information.
5. Personal Savings
The option available to some Filipino entrepreneurs looking to raise business capital in the Philippines is through personal savings. However, if personal savings are not enough, you may decide to fund your new business in the Philippines using a mixed strategy. For example, your personal savings can fund 50% of the business, and any private bank loan could fund the other 50.
When starting a new business in the Philippines, one area to consider is having an emergency fund. Having an emergency fund for personal life is common but building an emergency fund for a business is rarer. However, it’s equally as important; therefore, you may wish to consider holding back your personal savings to be used for emergency times only.
6. Use The Power Of Leverage
Archimedes said, ‘If you give me a lever and a place to stand, I can move the world.’ Archimedes, as the genius he was, understood the power of leverage. In today’s world, we understand the power of leverage in the Philippines and how it can be applied to business. So what is leverage? How can it be used?
Leverage is essentially using something to produce better results than you would without the leverage. For example, a CEO uses their staff to build a profitable business. The CEO then uses Angel investors to grow the business to the next level. In this scenario, the CEO used time leverage with employees and financial leverage with angel investors.
There are many different types of leverage that can be used in business. For example, if you are looking at how to raise business capital for a new business in the Philippines, could you use your assets as leverage to increase your income or to obtain a business loan?
7. Sell Unwanted Assets
A common question asked in the business world is what is an asset? Assets can be anything valuable to our business. In other words, this is an element that carries economic value. For example, assets can include ownership of buildings, trademarks, cash, designs, etc. A liability Is the opposite of an asset. Liability is often an element not fully owed and produces a negative financial impact.
Therefore when looking at how to raise money for a new business in the Philippines, a fantastic option is to sell unwanted assets. A good friend of mine, for example, sold his cryptocurrency in early 2022 to fund his new online store. So the question is, do you have any assets in your life that can be sold to raise business capital?
8. Team Up With A Wealthy Business Partner
Finding a wealthy business partner in the Philippines is very beneficial for many reasons. But you may be wondering what the difference between a wealthy business partner and an Angel investor is? Angel investors tend to be investors, whereas a business partner is more hands-on. Therefore, additional support and additional income are benefits of working with a wealthy business partner.
Even though Angel investing is slightly different from finding a business partner, Angel investment networks and other similar platforms can often be used to find a business partner. Alternatively, networking works very well, especially when looking for a new business partner in the Philippines.
9. Private Peer To Peer Lending
Peer-to-peer lending is slightly different from traditional lending as the capital is being raised by private investors. Investors often have the option to invest or not to invest in a certain project. However, the advantage is that if you decide to raise your business capital in the Philippines with peer-to-peer lending, interest rates are often much lower than traditional banking rates.
Some peer-to-peer lending platforms have started to offer shorter repayment terms for investors. This tends to be the trend for some peer-to-peer lending networks. For example, a loan might be as short as two months. However, this narrow repayment window may not be best for business owners looking to repay loans for longer periods.
10. Government Loans And Funds
Due to the rising requirements to start a business in the Philippines and the recent pandemic that affected the whole world, certain government loans and funds have been announced to support small businesses such as the micro, small, medium enterprise credit guarantee program (MSME).
Naturally, some requirements will affect how much money you can borrow to start your business. Business entrepreneurs can borrow from financial institutes such as banks and non-banks regulated by Bangko Sentral ng Pilipinas (BSP).
11. Use Credit Cards
Credit cards have got a bad reputation in recent years. However, if you apply suitable wealth management, credit cards can be a handy tool in today’s modern world. So naturally, when looking at how to raise money for a new business in the Philippines, credit cards may not be the best option, and naturally, there are pros and cons to this method.
One of the biggest disadvantages of raising money for a business in the Philippines is high-interest rates. This can quickly add up during the early stages of business. However, as we know, minimalizing expenses is key. Thus this may not be the best option, but it is one option that is available to entrepreneurs looking at how to raise money for a new business in the Philippines.
12. Order Now Pay Later
This last option is not so much to raise money but an option to postpone payment until you have raised the business capital. This is through the order now and pay later process. Some interest rates are very low while others are much higher, so this will need to be carefully calculated in the early days.
However, if your overall expenses are low and you believe you can make a profit early on, then ordering now and paying later may be an appropriate option for business entrepreneurs.
Tips When Raising Money For A New Business Philippines
One of the essential tips when raising money for new businesses in the Philippines is to calculate your expenses and how this will work with your business capital. For example, if you need 245,000 Pesos and choose a private bank loan, you may wish to investigate the following points…
- Are There Other Options Available To Me That Are More Suitable
- Can I Use Leverage In My Situation
- How Much Will I Be Playing And When
- Is My Credit Score In Good Standing Order
- Is This Capital Estimation Correct, Or Do I Need More Or Less
- What Are The Terms Of The Agreement
- Will This Positively Affect My Credit Score
You may also wish to contact an independent financial advisor or business professional so that you can make the right decisions for yourself and your business.
When raising money for a new business in the Philippines, the next tip addresses your fears and comfort zone. I’ve met many entrepreneurs over the years who have been terrified of borrowing money from investors even though they know their business idea is innovative and remarkable. Their fears held them back.
As Master Shifu once said – if you only do what you can do, you will never be more than you are now. The most important thing is to ensure that the business is alive and the strongest it can be. You may need to step out of your comfort zone to find better financial options for your business. Doing such actions will positively affect your business in the short term and the long term.
When looking at how to raise capital for a new business in the Philippines, the last option is to plan your business in stages. This involves carefully considering the financial implications and requirements during each stage. you may find that some equipment or essential processes can be delayed, which may give you time and finances to invest in the most important areas.
It’s always wise to remember that starting a business is similar to starting a house. The foundations always come first.
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