9 Options for Financing Your Small Business
In the world of business, they say money makes the world go round. This may be a little harsh but it is a reality. Without the sufficient finances you cannot run your business properly no matter how well planned it is. In other words, business financing plays a huge role in the survival of your business.
1. Establish a partnership with company or investors who are willing to put their money in your business. There a two types of partners, the industrial partner and the capital partner. Industrial partners are those who invest their time, skill and effort in the business in exchange for a portion of the income while capital partners invest through contributing cash or property such as machinery to the partnership. In establishing a partnership, your partner may impose a degree of control over your business besides having a portion of your income so make sure to choose a capital partner who has less demands and conditions and who you are comfortable working with.
2. Entice investors into your business. Approach possible investors and present a well formed plan that will convince them to invest. This is somewhat similar to partners. The only difference is that investors can only demand minimum control over the business compared to partners although that will depend on the level of investment.
3. Approach suppliers and make propositions. Convince them to give you supplies in a form of loan payable periodically. That way you will have your raw materials without releasing cash before you gain income.
4. Avail of loans. Inquire from banks and financial institutions for possible business loans. However, not all banks support newly opened businesses. They are more inclined to extend loans to businesses that are already operating. For starting businesses you might want to choose other ways of business financing.
5. Get cash advances from credit cards. This is normally used for a quick fix of your troubles but this is not advisable for a long term solution because interest rates on credit cards, can be very punitive. Try to get the introductory rates for lower interests.
6. Lease your equipment. Rather than spending your money to buy new and expensive equipment you might think of leasing them. Leasing generally reduces the amount of money you have to raise. Within the lease period make sure to save enough income to buy your own because leasing is more costly in the long run.
7. Avail of government programs. A Small Business Administration loan can be helpful in encouraging banks and institutions to extend business financing to establishments they might otherwise turn down. Generally SBA has the same conditions as an ordinary financing company.
8. Utilize your savings. It is time to use your long time savings for greater purpose. You might be a little hesitant but do not worry because if your business will succeed it will come back to you with twice its value.
9. Mortgage your property. Mortgage must be the last resort that you should consider because of the risk it can bring. If you fail to pay you might lose more than what you bargained for.
You can combine any of these nine choices to come up with a best business financing suitable for you and your business.
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