How to Raise Start-Up Capital With No Income Or Collateral

Written for Fempreneurs Africa Magazine


Readers’ Commonly Asked Question – I’m a housewife with a really good business idea. I have no other income or any assets to use as collateral for a loan. I’ve done my market research and it seems very promising. But where do I get the capital to start?


The honest truth is that start-up capital is difficult to secure when you have no income and no collateral. It’s even worse when you have no previous experience in running a business. However, all is not lost and we are here to provide possible solutions for the determined woman. Entrepreneurs are known for their never-say-die attitude. So if you are in the same situation as the lady above, you must be prepared to put in every ounce of effort that you can muster towards raising the capital you need for your business.

Our first and favourite recommendation is BOOTSTRAPPING. Bootstrapping is where you start small, and use the profits to build up the business. It’s our favourite recommendation because it removes the time spent chasing money that you may or may not get. It also removes debt liability or burden from the new enterprise, which can be very stressful for a first time entrepreneur.


Another alternative is to secure an order from a customer and get them to pay a DEPOSIT UPFRONT. The money could be used in the order and the profits used to start buying assets that the business needs. With this method, the entrepreneur has to be a very trustworthy person, and deliver as per promise. This would help the business to grow through word of mouth and more deposits.


Funding could also be gotten from SUPPLIERS. If there is a firm order for the products, the entrepreneur could convince her suppliers to give her stock or inputs  on credit, and then she can pay back once her orders have been paid for.


ORDER FINANCING is another alternative if the new entrepreneur can get an irrevocable order from a reputable client. This is an order that she can take to a financial institution and they will provide her the funding she needs, with an agreement that the customer will pay straight to the bank, and the bank will take their loan back with interest, and then remit the change to the borrowing entrepreneur.


If the entrepreneur can identify a potential BUSINESS PARTNER who has the capital and is willing to come in as an equity partner (meaning they buy into the business and become a co-owner with the starting up entrepreneur) this would be another good source of start-up capital. Just be sure that the terms and conditions of partnership are spelt out clearly in writing, with an exit clause to allow for future amicable parting of ways if necessary.


In conclusion, if you find yourself in love with a business idea that you just can’t stop dreaming about and being excited over, don’t give up. Be creative and resourceful around finding solutions to your problems. This will make it easier for you later on whenever you experience future business challenges, which are sure to come.


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