Sunday 28th July 2019
As a business owner, you’ll more than likely have challenges and problems that need to be overcome. It can often be hard to manage your business’s finances when you’re busy getting your brand out there, figuring out how to price your products and managing employees. However, without the correct funding, a new business will struggle to make it off the ground. This makes correctly financing your business a key ingredient for success.
Here are some common sources of funding that businesses can use:
While it can often be difficult to get a bank to finance your business, especially if it is a start-up, with a solid business plan and profitable projections you can give yourself a chance. The great thing about using a bank loan for funding is that you don’t have to give away a part of your business to acquire it.
Using a Credit Card
Using a credit card to fund your business carries risk but it can be a fast and effective way to fund your business instantly. Credit cards can be extremely costly due to their high interest rates. Despite this, half of all start-ups are funded by credit cards due to their ease of access and liquidity. For this reason, they are a valid option to consider for your business but use them with extreme caution. Because of the high interest rates, if you fall behind on your payments you could bury yourself in too much debt.
Rather than getting a general business loan which is broad in scope, your business can use equipment finance to acquire the equipment it needs to be successful. Funding your business in this way also has potential tax benefits depending on the type of equipment finance you choose. You have the option of renting the equipment, buying it outright and then paying for it in instalments or simply taking out a commercial loan to purchase it.
One of the ways to get around the reluctance of banks in giving out business loans is to apply for a microloan. A microloan is a small sum of money lent at low interest to a new business. Microloans are significantly smaller in the amount of money loaned but that small amount of money might be enough to create the spark your business needs to burn brightly. This type of loan is ideal for small businesses as you do not need to provide collateral like other forms of funding and do not need to wait a long time before you are approved.
It’s not always easy to acquire the funding your business needs for success, but it is a necessary step. As the saying goes, “you’ve got to spend money to make money.”
If you need help with choosing the right funding for your business, get in touch with us today.