4 ways to fund your green business idea
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An increasing number of entrepreneurs feel more empowered to launch their green businesses.
In essence, a “green” company strives to positively impact the environment and community besides generating profit.
The strategies and practices developed by green businesses are committed to lowering their overall environmental impact and building a more sustainable future.
Aside from putting forward their sustainable beliefs and advocacies, green business owners are also tapping into a rapidly growing market.
In fact, Markets and Markets note that the environmental technology market is expected to reach £502.94 billion by 2029, thanks to a compound annual growth rate of 4.6%.
Besides, the Convention on Biological Diversity’s Global Biodiversity Outlook 5 notes that businesses that recognise the importance of nature and protect it tend to perform better on the market.
If green businesses are indeed the future and you have an idea that fits here, you would still need to know how to find funding for it. Here, we list four ways you can raise capital for your green business.
Take out a small business loan
The first option that most startups or early-stage businesses go for is to take out a small business loan.
For one, small business loans have lower interest rates and more flexible terms than credit cards and other loans.
What’s more, you can take out a small business loan from a variety of financial institutions — from respected national banks to friendly credit unions.
And many of these institutions offer loans to encourage small businesses.
For example, HSBC launched a green loan in excess of £300,000 for companies that put sustainability first. To be eligible, they need to provide green credentials.
Small business loans are probably the easiest and fastest way you can access funding.
Look for investors
If you’re confident with your green business idea and it has the potential to scale, you should look for investors who can provide you with the necessary capital.
The great thing about being funded by investors is that there are many ways people can support your business idea.
For one, you can start a crowdfunding campaign where you bring awareness to your business idea and potentially gain numerous investors to pitch for your capital.
You can also look for angel investors to fund your business idea as these individuals have a strong interest in innovative and transformative businesses.
With a great pitch and robust business model, you will have a great chance of attracting suitable investors.
Bootstrapping through investment opportunities
If you don't have a good credit history, it can be challenging to get loans from banks or funding from investors, especially if you are a new business.
If a financial institution or investor has turned you down, you can choose to finance your green business by looking for investment opportunities with high returns.
For one, you can earn business capital by doing forex.
Small Biz Club highlights how forex trading can help you save a nest egg to fund your business, as long as you take the time to learn the ins and outs of this investment opportunity.
Thankfully, getting started with forex is easy since reliable trading platforms are available that will ease you into investing.
FXCM’s MetaTrader 4 can be easily downloaded and allows users to use a demo account to gain confidence before making any actual money trades.
Forex is a good way to create passive income that you can funnel into your green business.
Another investment opportunity that can provide quick and high returns are short-term corporate bonds.
Simply put, these are bonds issued by major corporations and pay interest at regular intervals every year.
In addition, corporate bonds are incredibly liquid.
They can be sold at any point before their maturity date — making them the perfect high-return investments for those who want to bootstrap their business.
Open a high-yield savings account
If you don’t want to go through impressing investors and are wary of taking out loans, you can save up your green business’s capital in a high-yield savings account.
The interest you earn in a high yield savings account can be as much as 10 times the interest you earn with a traditional savings account.
This makes high-yield savings account the perfect place to store your money when saving up for business capital.
What’s more, the arrival of internet-only banks has raised the competition on savings rates, so you now have more choices when saving up capital for your green business.
The only downside is that you will have to already have a large sum of initial funds for this to work.
Looking into trends and markets, there is no doubt that green businesses will grow stronger and gain more ground.
Finding the right funding is critical for entrepreneurs to start and scale their sustainable business ideas.
Headline image: Unsplash
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