21 Ways to Raise Funds for your Business

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Over the years, we have seen that for many entrepreneurs, one of the most difficult obstacles they encounter is raising money for their business. Coming up with

capital to start your business may be relatively easy, but getting more funds to finance the continued growth of your business could be a lot harder What you need to raise money?

There are many factors to consider when raising money in business, and it’s never an easy task. If you ask any entrepreneur or company founder – especially those who own start-up or small companies – big investors lining up at your company’s doorstep to invest is something they’d all want to happen. However, that’s not how it is in reality. Young entrepreneurs will most of the time have to rely on their own skills and knowledge to raise the money they need to support their businesses which is not an easy task.

Sources of capital

Bank loan:

This will be helpful to small business owners who have little or no experience with borrowing and who do not know the best way to approach a bank for credit facilities. Types of bank loan: There are different types of loans offered by banks and the first step for a serious entrepreneur is to know the right one for his/her business.

Depending on your needs and the type of business you want to start, there are basically two main types of small business loans: overdrafts and term loans. An overdraft is a type of loan that allows you to withdraw money from your bank account even if you have little or no money in it.

So, if your bank approves an overdraft of #50,000 for your business, it means you will have access to this money even if your account balance is zero. Overdrafts are usually short term and last for about six months to one year before they are renewed. As a result, they should only be used as working capital for business activities that are short term in nature such as paying staff salaries or purchasing goods to be supplied to a customer.

Advantages: One of the benefits of a bank overdraft is its flexibility. You only pay interest on the amount of the overdraft you use; if you don’t use it, no interest is paid (except for some bank charges that may apply). However, its disadvantage is that it is only available to solve short term capital needs. Never use a bank overdraft to purchase equipment or lease a property which has a longer term than the overdraft itself. Using a (six- month) bank overdraft to pay for a two-year office lease is trouble.

Get advanced funding from customers:

This is one of the few ways of starting or running a business with zero capital. Customers with an urgent or desperate need for a product or service are often willing to pay the full price (or part of it) in advance. This ‘upfront’ payment usually provides you with the capital you need to produce the product or service; get it delivered to the customer and turn in a nice profit.

Enter for a ‘business plan’ or ‘entrepreneurship’ competition:

You would be amazed at the number of business plan competitions that are available every year for African entrepreneurs and small business startups. Many people don’t even know about them. All kinds of local and international organizations put these competitions together to encourage and boost small and medium scale businesses on our continent. Governments, foundations, the United Nations are just a few of the big names behind some of these contests. For instance, are you aware of YOU WIN programme?

Partner with who has cash:

Most times, having a great idea isn’t all it takes to start a business. You may have the technical skills or brain power to build an amazing product but you still need a partner who has money that you need to make the product and sell it to the market. When you have a profitable business idea and find a partner who can contribute the capital, both of you bring something to the table and can share ownership of the business. It’s a win-win situation for both of you!


Those who require loans without security, applications should be made to the NDE. The directorate caters for unemployed graduates, school leaver and other able-bodied unemployed people. Contact your state office of the NDE for detailed information.

Co-Operative societies:

It is one of the effective and reliable sources of capital for your self- employment business. Its advantages are: 1. Low interest rate 2. No collateral 3. Loans are payable for a period of ten months or more.

Business angels:

Another source of raising money for business is to source funds from high net-worth individuals. These are business angels with substantial idle funds. The only challenge is getting someone they trust to introduce you to them and getting them listen to your business proposal. Business angels come in two varieties: Those you know and those you don’t know. They may include professionals such as doctors and lawyers; business associates such as executives, suppliers and customers; and even other entrepreneurs.
Unlike venture capitalists and bankers, many angels are not motivated solely by profit. Particularly if your angel is a current or former entrepreneur, he or she may be motivated as much by the enjoyment of helping a young business succeed as by the money he or she stands to gain. Angels are more likely than venture capitalists to be persuaded by an entrepreneur’s drive to succeed, persistence and mental discipline.

Federal Development Banks:

Bank of industry (BOI) Nigeria Bank for commerce And Industry(N.B.C.I.) Nigeria Agricultural Co-operative And Rural Development Bank(N.A.C.R.D.B.) Federal Mortgage Bank Merchant Banks Nigeria Export/Import bank (NEXIM)

International agencies:

International Finance Corporation (IFC); International Bank For Research And Development (IBRD). IBRD is giving out NERFUN/SME loans for the development of small/medium enterprises through local participating banks

Micro-Finance Institutions (MFIs):

These are institutions that provide credit facilities to groups or person that cannot be assisted by banks. MFIs funds are obtained from international donors, non- governmental agencies, multi-nationals and public sectors.

State Government investment corporations:

In Nigeria, a good number of state governments have established finance for agriculture, small and medium scale industry and housing. Some of the corporations provide both loan and equity finance for Small and medium scale industry and housing.


Obtaining funding from NERFUND is a very serious business. Your first port of call for NERFUND loan application is your local bank, which will accept and process your application for the bank’ consideration.

Personal savings:

You cannot achieve much in life without personal savings. A good saver of money will have at his or her disposal capital that can be invested in any chosen self employment business. It is really not how much you save that matters but the fact that you develop your saving habit.

Credit facilities:

Credit facilities are obtainable for either raw materials or wholesale goods for retail. Generally trade credit is credit extended by suppliers. You may need some references to be considered credit worthy.

Life insurance policy and insurance companies:

Life Insurance Policy: this is a form of compulsory saving in a specific period of time towards a project or plan. Insurance Companies: they are major source of finance for industry directly or indirectly through the banks. Here are a list of some strong and reliable ones: a. Nigeria Agricultural Insurance Corporation. b. Niger Insurance. c. Standard Alliance Insurance.

Assets finance:

The most popular method of financing machines and equipment needed in business is via hire purchase and leasing. The asset finance companies of Nigeria have developed a number of ways of assisting small and medium sized business owners and start-up entrepreneurs.

Finance houses:

Finance houses are privately owned investments companies which give assistance to companies which are unable to finance the purchase of assets through borrowing, by hire purchase or a leasing arrangement. Apart from providing finance, they assist companies in capital restructuring or project financing.

Other people’s money:

This is another possible source of capital to finance your business. You will have to convince the owners that the money will be judiciously invested and also enter into some sort of agreement.


If you need business fund on medium or long term basis then you could consider entering into partnership with people of like minds who may decide to take some active part in managing the business with you. This is a sort of strategic alliance and the operative phrase is to partner with people of like minds. You may also consider merging with another company that has what you do not have.

Crowd funding:

Crowdfunding as a source of business capital is a technology fuelled method of pooling money from individuals to fund projects. It is the practice of funding a project or venture by raising many small amounts of money from a large number of people, typically via the Internet. The administrators earn commission on the amount raised as their services charge based on the agreed terms.


Gratuity should actually be invested wisely so that the rest of the retiree’s years can be well spent. Spend good time to adequately prepare yourself and explore the various sources of funds explained above. Your chances of getting funded are good if you prepare yourself well enough.
However, don’t approach investors with a selfish mind of what you, you and you alone will gain. That puts them off and they may not listen to you a second time. Instead, present your request stating clearly what the investors stand to gain from the venture and you are most likely going to receive their kind consideration. We have found this approach very crucial in getting required attention from investors in our consulting experience over the years. Many individuals and organisations have benefitted from our experience in this niche over the years. You can too.

Published by same author on New Telegraph Newspaper on June 16th, 2014: http://newtelegraphonline.com/21-ways-raise-funds-business/

Read 2364 times Last modified on Monday, 15 June 2015 07:55
Emmanuel Excel Ogbeide

He is the CEO of business builders limited, a professional services company into international business development and SME training, consulting, research and information, business and education empowerment, capacity building programmes, Training Content Development and Delivery, etc.

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