Raising Capital

Money makes the world go round, and nowhere is this more the case than in the wide world of business. Cash is the high-octane fuel for making any business go and the more cash you have, the better it's going to run. Cash pays for plenty, including:

The office supplies you need to do your work
The salaries of the people who help you do your work
Your rent and utilities
Almost anything else that you need to make your business a business.

To make a long story short: no cash no business.

So, if you really need cash fast, what can you do?

The good news is that a number of options are available to you if you're looking for some fast cash.

Borrowing

Many business owners particularly owners of start-ups first turn to family and friends for the capital they need to run a company once they've exhausted their own funds. This source of financing offers benefits to both parties. The business owner often gets a favorable interest rate and flexible payment terms with no need for credit checks or loan applications, and the lenders get an opportunity to become early investors in an enterprise that may pay off handsomely when it matures.

Keep in mind, however, that more than a few friendships and family relationships have been utterly ruined because of business disagreements or misunderstandings. Before accepting a dime from your family or friends, be sure that you put all these understandings, along with specific loan terms, such as the total amounts borrowed, interest rates, and loan terms (the number of months), into writing. If you're talking about a lot of money, you need to have your lawyer either draft this agreement or at least review it before you use it.

Credit Cards

Credit cards offer one of the quicker and easier ways to raise capital for a business, and the histories of some of today's more famous companies are replete with stories of founders using their credit cards to fund their startups. Of course, all this quickness and easiness comes at a sometimes hefty price interest rates that some may consider little better than what you can get from your friendly neighborhood loan shark, anywhere from 11 percent to 18 percent to 22 percent and sometimes more.

First, the good news about credit cards:

They're supereasy to get. If you can sign your name, you probably qualify.
If you've got a good credit history, you may qualify for a high line of credit, from $25,000 to $50,000, and even more.
They're extremely flexible: Just about every store in the world accepts them, and you can use them for cash advances through a bank.

Of course, with the good comes the bad:

They're supereasy to get. That means it's easier than ever to get into financial trouble when you fall behind in your ability to pay off your charge cards.
Interest rates can be high, sometimes up to 20 percent and more.
Membership fees, cash advance fees, and other fees can add additional costs to an already expensive approach to raising capital.

For short-term capital needs, credit cards provide a convenient and flexible way to raise the cash you need. However, if you don't pay them back quickly, the money you borrow with your credit cards can quickly become expensive, indeed.