Thousands of people start companies every year. Whereas the businesses are usually different, the people who start them have one thing in common, and that is they have had to raise money to finance the company. They have had to find ways to be able to build the business from the ground and cover corporate expenses. Finding the right financial resources in such a competitive economic climate can be challenging for anyone, this can be you looking for some startup funds, capital to expand, some money to hold on through the rough first stages of the business building. However, thanks to the current affairs of the state it has become more and more difficult to secure funds.
There are two basic ways you can use to finance your small business, and they are equity and debt.
Debt – this is a line of credit or loan that helps in providing you with an amount of money that needs to be repaid in a specific span of time. A lot of the loans are usually secured through assets, which means that you place a collateral agreement where the lender can take away your assets if you are not able to pay them on time.
Equity – this is when you sell a part of your business (also known as equity stake). You do not often have to back the investment in this situation because the new owner of the equity is reaping all of the benefits and the cash flow that is linked to that equity stake.
Regardless of the name of the product, all of the financing solutions always consist of equity, debt, or a hybrid combination of both. You will need to keep in mind that there are no good or bad solutions and the best solution for you would depend on your specific circumstances and requirements.
The easiest, and most obvious ways of financing your business is by using your own money. In an ideal world you should be saving money for a length of time and also use this money to be able to fund your business. This is possibly the most conservative, safest, and wisest way to start your business. However, the issue with this is that you are limited to the amount of money you have saved.
If you do not have any credit history, collateral, or are unable to secure a loan does not mean that no one will be lending you any money. The first option would be to apply for a business loan. These can be small loans, which is usually the case, or bigger loans as well. There are many organizations that fun small businesses such as Max funding. The Australian funding company was founded in 2008 by a group of investors. It is one of the most reliable financial institutions across the country with a certifiable track record of satisfied customers. The institution provides a lot of financial services like fast business loans, unsecured business loans, and equity business loans to small and medium enterprise all over Australia. They have received the Prime gold Award by Australian Customer Service, Australian Achievers award, St. George business Award, and Hurstville business award. The company has also been featured on many national outlets like the Sydney Morning Herald, Financial Review, and Finder.com.au.
You can also make use of crowdfunding websites like Kickstarter.com. It can be a fun and effective way to raise money for a relatively low cost, creative project. You will set a goal for how much money you would like to raise over a specific period of time. You will be able to raise money through friends, family, and stranger by using the site to pledge money. The site has been able to roughly fund about 1,000 projects all the way from documentary films to rock albums since its launch. However, you need to keep in mind that this is not about support for a single one-off idea. Often the project creators offer incentives for pledging such as if you give a writer about $15 and you would get their book in return.
This is a finance method where the company sells its receivables for a discount and gets the cash upfront. It is usually used by companies who have poor credit history or businesses dealing in apparel manufacturing and they have orders to fill long before they get paid.