Business Finance and how to get it!
The whole issue of business finance is one of the hottest topics that business owners and entrepreneurs alike face every day. Once this group of prominent persons throws a credit crunch or recession into the picture, the discussion takes unprecedented turn.
The truth is that when you come up with a business idea, the next step would be to find ways and means of sourcing finance in order to fund it. Well, you would be surprised at the number of options that are available to get your business off the ground. Without further ado, let’s have a look at some of these alternatives.
Do you have some money in your bank account? With rates of interest hitting an all time low, it’s not doing any good to you when it lays idle in the bank. Perhaps some people have made you redundant, and you have money burning a hole in your pocket. All the same, the best thing about using your savings to finance your start-up business is that you need not borrow some money from someone. In addition, you have an added advantage since you won’t be forced to start out in debt, or having to part with substantial part of equity at an early stage.
Family and friends
If you are determined to getting some business finance for your start up business, you can always count on your family or friends to provide you with all the financial support. The truth is that when you enter into a negotiation with your nearest and dearest, you are likely to get the most favorable terms. This is because they will, in many occasions; love to lend you a hand for a slice of the pie, once you are successful, rather than a donation or a straight loan.
Another source of business finance is through bank loans. Oftentimes, these loans are required once the business has had a proper foundation. This means that the now incorporated business may require a bank loan to meet its recurring obligations that include the daily operating capital, as well as its plans for long-term growth. All the same, in order for the business to secure this loan, the bank may request some financial information for both the entrepreneur and the business. In addition, they are likely to request collateral in order to secure and guarantee this loan.
Once the business has shown some growth and has shown signs of steady revenue, some angel investors may be called upon just in case the business requires more funding. This group of affluent individuals, who pool together their resources and research, provides funds for any start up business, but only in exchange for ownership or a convertible debt. Before these angel investors decide to finance your business, they will first conduct some due diligence to determine if your business meets all the requirements that form the basis of loan financing.
That said, sourcing for business finance may seem a little bit difficult, but if you develop a business plan that will prove to an investor the value that he will get by investing in your business, you will increase your chances of securing any finance you need, regardless of the stage of the business.