In today's inter-connected world, starting your own business is easier than ever! Not only do you have the ability to market to a larger audience than ever, for a smaller price than ever, but you can also access insider knowledge, mentoring and network with other entrepreneurs easier than ever. It's surprising more people haven't started their own business! There's always the same old roadblock however: finance. This has been made easier with the internet however, and gone are the days when the only opportunity was begging the bank for a loan! Now, there are more ways than ever to fund your new business based in Malta!
1. Your own assets
The first port of call for you may very well be using your own assets! These could include properties, jewellery, stocks and shares, savings accounts, cars & other vehicles, mutual funds or anything valuable in your possession! There are two ways you can use them, either selling them off for liquid cash, or by putting them up as collateral for a loan. Either way you choose, we would highly recommend asking a financial advisor first, especially as this will effect your personal and possibly business taxes!
2. Angel Investment
These are people who enjoy seeding money to entrepreneurs that have an idea in order to gamble on the entrepreneurs idea being a "unicorn" and multiplying their initial investment exponentially. They normally have lots of expertise and networks you can draw upon and will normally give you better financial terms than bank loans, but expect to have to dazzle them with your idea and business plan if you want them finance your idea!
3. Family & friends
This is one way to finance your Maltese business, but it is personal for you. Many entrepreneurs offer family and friends percentages of the new business in exchange for start-up capital, while others ask fora loan because of the great terms you can get. The caveat with this method however, is that if the business fails, you may well ruin your relationship with that person. For this reason it's very important you show them all the risks involved with your venture.
4. Credit & Credit Cards
Credit cards are a way for you to finance your business' small expenses without eating into your bottom line immediately. However, credit cards will be linked personally to you as an entrepreneur, and failing your monthly payments will affect your future credit. These also normally have very high interest rates compared to most other sources, so you must have a plan to pay off the credit quickly.
5. Loans from Banks
The good old trusty bank loan! Even until only a couple of decades ago, this was the only way to raise money for your business idea. The problem with it is, very few people qualify for bank loans, and of those that do, it's very hard to win a bank around to your business plan. However, if you have lots of collateral and a good credit rating, this may be a good option for you. You'll have fixed monthly payments and interest rates, which will help you budget better.
These are fairly good loans, especially for entrepreneurs that have low overheads or seed money requirements, such as online agencies. They normally have low interest rates and are for the short-term only. They also don't place as large an emphasis on credit history as banks do.
Self-funding, or rather bootstrapping is a fairly famous term now. By doing odd jobs, evening jobs and side hustles to make extra money, entrepreneurs will then place extra capital into their passion business. It is one of the most reliable ways to finance your company in Malta, and also means you retain complete control over your business as you have no third party investors. The downside to this is time and energy spent on the side hustles, is time and energy spent away from your business.
8. Small Business Administration Financing
The Maltese government's Small Business Administration offers loans to individuals through commercial lenders. Because this is a government funded initiative, only certain companies or individuals are eligible for them, but those that are have very favourable terms in comparison with other choices.
Otherwise known as Social Lending; this is when you raise a small amount of money each from a large pool of investors. This is especially common when you have a working product at the end of your line you can then send to people, as they have bought the product at a discount.
10. Online loans
Online loans have become a way for small businesses to thrive. Using websites, entrepreneurs in Malta can get loans in as little as 48 hours. Even with a bad credit score you can get a loan. The problem with this is, typically they are only available for already established businesses that are at least 3 months old.