The biggest challenge for a new entrepreneur is always the money to start a business. In all the aspiring entrepreneurs I have spoken, around 90% of them think that the reason they cannot start a business is because they do not have enough capital. Capital can mean many things. It can mean money, product, ideas or skills. For this article, the focus will be on the first two I mentioned (more on sources of money or cash) One of the goals of Innove is to make entrepreneurship simple so everyone can do it. Part of making it easy to do is to provide different sources where one can get money to start a business. Now, it will just depend on you if you will get up and go after you read this article.

There are 3 main categories where money can come from. The first one can come from you. The second source can come from investors and the third source can borrowed from people or institutions. Of all the three sources, the safest one, of course, is the money that comes from yourself because you do not have to pay any interest. But the other two can help you grow your business fast.

Here are the different sources of capital:

Personal Money.

• Savings. This comes from whatever you save from your monthly salary.

• Interest from Investments. When you place deposits in banks or lend your money to a bank, your money earns interest. There are different bank products you can invest your money, it ranges from high risk to low risk. You choice will depend on the type of risk you can take. Aside from banks you can also invest your money in the stock market.

• Dividends from Insurance. Insurance companies, depending on the product your buy form them, pay you dividends. The amount you earn will depend on the performance of where your money was invested by the insurance company. If you have insurance, you can ask your broker if the product you bought earns dividends.

Investor’s Money

• Business Investors. These are people who put money into your idea with the expectation of financial returns.

• Angel Investors. These are people who put money not for the idea but to help the person behind the business succeed. Angels, most of the time, are members of the family.

Borrowed Money

• Credit Card. You can use your credit card for two purposes. The first one is to make a cash advance to use as a starting capital and the other one to buy raw materials as part of your initial inventory.

• Product Loans. “Terms”, this is how they call it in the Philippines. It can be 30 days, 60 days or whatever deal you make with your supplier. The idea here is to ask your supplier for products and delay the payment based on the agreed “terms”.

• Consignment. This is some sort of product loan but not really. This is how it works. You ask a supplier to lend you products and only pay them when you have sold the item. Of course both of you want to sell it fast so you can reinvest the money to produce another batch of products or in marketing.

• Bank Loan. With bank loan, you can borrow a bigger amount of money for your capital. But there are more requirements that are needed like collateral and official documents.

• Insurance Policy. Yes, you can loan from your insurance policy, but it depends on the policy that you have. You can ask your broker if your policy permits you to borrow money from it.

• SSS salary loan. If you are “employed, currently paying self-employed or voluntary member (SE/VM) who has 6 posted monthly contributions for the last 12 months prior to the month of filing of application” then you are qualified to make a loan.

• Pag-ibig multi-purpose loan. Here is another benefit for members. To be eligible you need to have 24 monthly contributions. The loan can be used for any purpose you want. This can be another source of capital for startups.

• OWWA. One of the perks of an OWWA member is being able to borrow money from the agency. I have spoken to several OFWs who have taken advantage of the facility to start a business.

• Cooperatives. Group members can also avail of extra cash for their business needs. I had a student who borrowed money from their cooperative to start a sari-sari store business. Now she has 3 stores in the province.

• Friends and Relatives. Try listing down your rich friends and relatives whom you can approach to borrow some money for your business. But be sure to pay so you can keep the good relationship.

• Pawn Shops. If you have some assets and you want to turn them into cash, you can just visit your nearest pawnshop. You can either get back the item you pawned or just let go and buy a better one from your profit.

• Loan Sharks. “Five-Six”, these are people who lend you money in return for a big amount of interest. It is very easy to get a loan from them because most of them approach you and offer you the money. For a start-up, my advice is to compute if you projected profit will be able to pay the loan and the interest.