Over the past year, the number of LLC members increased by 5.25%. Clearly, the limited liability company (LLC) structure is wildly popular.
If starting your own business is something you’ve always dreamed of, then an LLC of your own can be a crucial first step.
An LLC provides protection from personal liability should a court judgment be paid against your business. Your own personal assets (houses, vehicles, bank accounts) will be safe.
Are you itching to start an LLC of your own? Keep reading to learn the many different ways on how to fund an LLC and get your business up and running.
Pool Money From Friends and Family
This can be a great way to get the money you need to get your business off the ground without going into debt. There are a few things to keep in mind if you go this route, though.
First, make sure you have a clear business plan. Make your friends and family understand what they are investing in. It’s also important to be clear about how much money you need and what the timeline is for repayment.
Finally, remember that even though these are people you know and trust, you should still have everything in writing. This is to protect both yourself and your investors.
Get Funding From Traditional Bank Loans
There are a few benefits to using bank loans to finance your LLC. For one, you’ll likely get a lower interest rate than you would with other types of financing.
Additionally, you can use the loan for any business purpose. This includes equipment, inventory, or working capital. Finally, bank loans are easy to qualify for, as long as you have a good credit score and a solid business plan.
You should also consider a business bank account for your LLC. It separates your personal finances from your business finances. This is important for both personal asset protection and tax purposes.
Approach Venture Capitalists or Angel Investors
Venture capitalists and angel investors can be great sources of funding for businesses. But it can be difficult to approach them and secure the money that you need.
One way to increase your chances of funding from them is to have a well-developed business plan. It should outline your company’s potential for growth and profitability.
You should be prepared to answer any questions that the investor may have about your business. If you are able to convince investors that your company is a good investment, you will be more likely to receive LLC funding.
Use SBA Loans
Loans from the Small Business Administration (SBA) can be used to fund the formation of an LLC. SBA 7(a) and 504 loans are the most common loan programs used to finance the start-up of a small business.
Borrowers should expect to provide collateral for the loan. They should also have a business plan to present to the lender.
The SBA does not directly lend money to small businesses. It guarantees a portion of the loan, making it easier for borrowers to obtain financing from a bank or other lender.
Ways on How to Fund an LLC
If you’re looking for ways on how to fund an LLC, there are a few options for your business. You can use personal savings, take out loans, or seek investment from venture capitalists.
Once you have a solid plan in place, you’ll be able to more easily secure the funding you need to get your business off the ground.
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