There are so many sources of small business financing you can access everywhere. Entrepreneurs certainly can capitalize their businesses from these small business financing opportunities that will be elaborated one by one in this article.
Business financing is often to be found on certain sources of organizations such as government, banks, investors, and venture capitalist. It is imperative to take note of what the lenders need when you propose loan to them. Lenders will want to know about your business history to see whether your business has executed the business beneficially or not. They will also review the track record of your company management. Poor demonstrated proposals, incompetent collateral, inadequate cash flow, and deficiency of management are the general causes of numerous small business failures, and these will become negative considerations for them. What you need to bring to them are the opposite ones and also a proven positive credit history that will support you to get a loan.
Small business finance
Easily accessible, used at start-up and during early expansion.
Friends and associates
Beware of mixing family/friends and business, consider all possible outcomes and what impact that may have on your personal life. Ideal for start-up, early stage/pre-trading and expansion.
Overdraft and short/medium term loans, mostly to finance short-term acquisitions such as office equipment and support irregular trading patterns and cash flow shortfalls.
Alternative cash flow management tools, consider the potential impact on your relationship with your clients, there are potential positives and negatives associated with having a third party involved in the accounts receivable process.
Grants and other government support
Usually restricted geographically, by time or for specific industries or purposes, another potential case of who you know not what you know, and likely to exponentially diminish with government cut-backs.
Private equity/venture capital
Development funding provided for a share of the equity and usually requiring significant growth within 3-5 years, can produce serious amounts of money, but can again be a case of who you know – so get networking in the right circles!
Venture capital is seen as requiring a ridiculous rate of return or demanding a majority shareholding.
By the nature of the investment, more successful investors will often be looking for larger opportunities as they experience a law of diminishing returns.
Further support for short-term capital acquisitions, a good potential source of leverage but consider all the taxation implications of each form of leasing finance.