If you’ve been asking yourself whether your business needs funding or not, unless you have enough money of your own, the answer is a big ‘Yes!” Funding is important for all businesses in order to reach their goals. Whatever the size of your business, you’ll need funds to put your business into life.
Generally, you’ll need funding for any of the following business goals:
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Get the business started
If you’re starting from scratch, it only means that you’ll need to lay the foundations of setting up an office. These include buying equipment and supplies, building a website, posing ads on job boards to build your team or getting the services of a recruiter, and the rest of the nitty-gritty of operating a business.
All of these are basic necessities that you should provide in your organization for it to function properly.
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Augment your cash flow
In the initial stages of your business operations, you might find it difficult to make some profit or at least break even. This is understandable, considering that there are expenses you should be spending money on. You have to pay salaries to your employees, pay your accounts with utility companies and suppliers, and the like.
Extra funding can help you meet all of these expenses until such time that your business is sustainable and you’re making enough money on your own.
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Expand the business
Business expansion is your viable option if:
- You need to scale up your operations. Perhaps your current building is no longer enough to accommodate your client or employee base—in which case you’ll need to relocate your office to a bigger space. Hence, you should be ready to spend on leasing contracts, construction or moving services, and similar expenses.
- There are promising opportunities that you want to explore. Whether you plan to branch out into related industries or add more products or services into your current offering, you’ll need funding for your research and development efforts.
These are just three of the most pressing reasons that will require you to source finances for your business, although some other equally important activities like repairing or renovating your facilities and equipment are also valid reasons to consider for getting extra funding.
Where to Get Business Funding
Whatever it is that compels you to look for business funding, you’ll be glad to know that you have several options available. These sources of funding can provide the financial resources that you need as long as you qualify or meet their requirements. Since each of them has their own set of criteria as well as pros and cons, you’ll need to review what’s in it for you.
Here are top alternatives for your business funding needs:
Option No. 1—Bank Loans
Banks have been a traditional source of funding for businesses. There are certain circumstances wherein you might want to give bank loans a try. For instance, you might want to approach banks where you keep your personal accounts. You just need to be ready to comply with an extensive list of requirements, including a detailed business plan, audited financial statements, and tax returns.
Option No. 2—Grants
Grant programs awarded by private companies can help your small business as they provide funding that you don’t have to pay back. They come few and far between, but the fact that they can give you with free money on the table makes them worth going after for. You can search for grants online using keywords that relate to your industry, location, or demographics.
While there are also state-funded grants that exist, they mostly cater to research and development for health or environmental projects.
Option No. 3—Angel Investors
Angel investors refer to people who have a net worth of at least $1 million and whose annual income is at least $200,000. They’re investing an average of $330,000 in small businesses, and expect a return that ranges from 20% to 35%.
Because they have invested their money in your business, they might want some control in your business—whether it’s in giving you advice about how to run your business, choosing your service providers, or making other business decisions.
Option No. 4—Online Loans
Technology has given rise to financing innovations for enterprising individuals. Through online business loans, it’s now possible for you to file loans that you urgently need and receive the proceeds within the same day that your loan is approved. Interest rates and repayment terms are reasonable, so paying off your loan won’t give you any more unnecessary burden than what you can handle.
The process is surprisingly straightforward, too, as you’ll know the results immediately after completing your loan application. Even if your credit profile isn’t as outstanding as you would like it to be, you can still qualify for a small business loan.
Cashing In on Business Funding
Raising money to fund your startup requires that you establish yourself as a worthy and profitable investment. This is why you should use the evaluation process of your loan application to demonstrate that you have complete and first-hand knowledge of how your business works. At the same time, it’s important to lay your cards on the table in order for you to avoid any dispute or issues in the future with potential creditors.
Once you’re able to establish that funding your business will be mutually beneficial for you and your financing partner, it will be easier for you to negotiate and secure terms that are workable for you.
