To grow or start a business, you would need a source of funding to keep the business progressing and expanding.
To have these funds granted, it is important to know the type of business you are into before sourcing for funds so you don’t waste time trying the wrong source. For example, there are two major forms of financing available for a small business, which are debt and equity.
Sourcing for funds helps speed up your business growth, empowers you to acquire new equipment, pay staff, among many other business needs. To understand how several finance sources operate, you must know their methods, read about them via their website, and through third party review sites. With review websites like ReviewsBird.com, you can read other customers’ opinions and feedback, and also reviews of credit companies and how they operate. This should direct your path on the best possible ways to get funding for your business.
To further help you, here are some of the major sources through which a business can get its finance from:
1. Invoice Finance:
The invoice financing permits companies to borrow money against the value of invoices from customers. Invoicing factoring and discounting are two forms of invoice finance. Invoice financing is a great option if you run a business with many corporate or SME customers with long payment terms, and it is available to companies that have strong records of generating revenue and getting paid by customers. To secure the invoice finance, you will have to update your financial accounts from time to time, and ensure that customers are consistent in paying their invoices.
2. Business Overdraft:
Business overdraft is every effective way to set up a loan for the short term. Any amount can be borrowed on an agreed limit and companies can negotiate different amounts with banks. This source of finance is useful when the business is struggling with timely cash flow, the overdraft covers short-term cash flow storages from seasonal activities. The interest rates are usually higher than the other forms of finance.
Crowdfunding serves also as effective marketing as you are indirectly bringing sales to find your business. It allows you to raise funds from many investors or purchasers. To achieve this you can either run an equity crowdfunding campaign where you exchange equity for Investment or a reward-based crowdfunding campaign, where your investors receive rewards in exchange for their capital. There are several crowdfunding platforms available to pick from.
4. Business Credit Card:
The business credit card is a short term source of finance for small businesses. Usually, companies use a credit card to pay for business-related expenses and won’t incur any interest, provided the balance is paid off by the end of the period. The card offers a different credit limit and is useful for new start ups.
5. Asset Finance:
It is a form of finance that requires capital to purchase high-value equipment or machinery for companies. It comes as hire purchase finance lease and operating lease for new assets.
These are some of the major sources through which businesses get their finances from. Of course, there are other sources, and you can take advantage of these sources to secure funds for your business and attain expansion.