5 Strategies for Business Funding
Bank Financing One of the most obvious routes to small business funding is a business bank loan, however in the real world these can be difficult to be accepted for unless you have collateral to speak of, or you are willing to put up personal guarantees to cover the debt if the business were to cease trading before the loan had been repaid.
A good strategy is to start with your own bank, your existing bank will be in a good position to merit you for your good standing and trading history.
It pays not to over look other lenders, even if your bank offers you a competitive rate.
Invoice Finance (Factoring) Factoring can be a low cost way of raising quick funding.
It is ideal for business with steady sales in the b2b market space.
Factoring companies will provide business funding based on the value of your unpaid invoices.
This is a viable route if you operate with high margins to justify the fees associated.
Overdraft/Credit Cards If you are looking to cover unexpected purchase and expenses then credit cards can work.
For a new company with low initial launch costs credit cards can be a viable option.
There are many interest free rates available so it can be a quick and effective source of business funding.
A bank overdraft is another option, however this is an unstable form of finance as the bank can remove the overdraft facility whenever they choose to.
Equipment Leasing If you require business funding for the capital outlay for machinery or expensive equipment then leasing could be a safe bet.
Leasing spreads the cost of owning critical business equipment over a period of time enabling the operation to scale up pretty quickly.
Equity Finance/Outside Investment Seeking business funding by releasing equity shares in your business can be highly beneficial as outside investors, such as Business Angels can add expertise and knowledge to your business as well as the funding you need.
This type of funding also carries less risk to your possessions as you will not typically be required to provide any personal guarantees to cover the funding required.
An inexpensive way to attract investors to your business is to register with Edge Venture and record an elevator pitch, this will present your business funding opportunity to many investors at once.
A good strategy is to start with your own bank, your existing bank will be in a good position to merit you for your good standing and trading history.
It pays not to over look other lenders, even if your bank offers you a competitive rate.
Invoice Finance (Factoring) Factoring can be a low cost way of raising quick funding.
It is ideal for business with steady sales in the b2b market space.
Factoring companies will provide business funding based on the value of your unpaid invoices.
This is a viable route if you operate with high margins to justify the fees associated.
Overdraft/Credit Cards If you are looking to cover unexpected purchase and expenses then credit cards can work.
For a new company with low initial launch costs credit cards can be a viable option.
There are many interest free rates available so it can be a quick and effective source of business funding.
A bank overdraft is another option, however this is an unstable form of finance as the bank can remove the overdraft facility whenever they choose to.
Equipment Leasing If you require business funding for the capital outlay for machinery or expensive equipment then leasing could be a safe bet.
Leasing spreads the cost of owning critical business equipment over a period of time enabling the operation to scale up pretty quickly.
Equity Finance/Outside Investment Seeking business funding by releasing equity shares in your business can be highly beneficial as outside investors, such as Business Angels can add expertise and knowledge to your business as well as the funding you need.
This type of funding also carries less risk to your possessions as you will not typically be required to provide any personal guarantees to cover the funding required.
An inexpensive way to attract investors to your business is to register with Edge Venture and record an elevator pitch, this will present your business funding opportunity to many investors at once.
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