Pera ni Juan

You have an idea. A new invention or a new product. Or perhaps a service oriented business. You did the feasibility study and have a target market. Everything is in place, but you don't have the funds to start with. What should you do?

Normally you dig from your own pocket and try to find money. If you have savings from the bank that you saved for so many years, well congratulations! You can start with that. Using your own money is the safest way to finance a business. But fact of the matter is there are a few people who have that luxury. Most of us does not have savings--well not as large as you think.

So what should we do then? Next thing that comes to your mind is of course your close relatives and friends. The advantage of this is your able to get away with paying very low interest or none at all. On top of which they are more flexible...No deadlines or penalties. Not even contracts. But this could be a double edge sword. If somehow your late on payments or worse you don't have the money to pay back, Your relationship might dwindle.

So what else can we do? Look for outside source:

Credit cooperatives – These are a popular and easy source of credit especially in the rural areas. It may therefore be very useful for you, as entrepreneur, to join one. Usually a credit coop will lend an amount up to five times bigger than the money a member has deposited in it. Interest charges are often minimal.

Lending investors – These are business enterprises engaged in money lending operations. Considered a cross between money lenders and banks, lending investors extend short-term loans quickly to individuals and businesses with or without collateral. Interest rates are higher than bank rates but lower than those charged by money lenders – usually ranging from 3 to 5 per cent a month. Lending investors have proliferated all over the country and have become an important source of credit to small enterprises.

Formal sources of credit – These include banks, financial institutions and certain government development agencies and development-oriented non-government organizations. They are called formal sources of credit because they have the legal authority or mandate to lend money to individuals and businesses.

Credit Cards - This is only useful if you're planning to acquire an equipment or device that you will need on your business. Credit cards sometimes give 0% interest or deferred payment scheme. But be careful, Credit cards will kill you if you don't pay them. They will charge you with late payment interest and monthly fees. You use it wisely. As much as possible pay all your debt or at least pay the monthly minimum balance.

SME-friendly Banks - Yes! There is a bank that exist. You just have to look for it and see if it fits your criteria. Talk with the bank manager. If the manager accommodates you and values your time then you're in good shape.

There a lot of ways of raising money. You can sell your old stuff that you don't use anymore. You can apply for a part time job. Or if you can, get two jobs. Anything is possible. You just have to think outside of the box.