Finance

A Guide to Funding Options for Your Small Scale Business

small scale business

It really sounds fantastic when you have an angel investor to finance a small-scale business. There are overwhelming options when it comes to small business loans. But you need to remember that all available loans are not fit for your business line. You need to consider the loan terms, options, interest rate, repayment duration, and other minute details.

Financing is not a complicated term but you need to understand properly how you are going to finance your business and the sources you will prefer. Small business loans even include term loans, the line of credit and small business credit card, etc. In this post, we will provide you with the required guidance regarding the exact time to consider for raising business capital from outside sources as well as the vast range of options available in the market for financing small businesses.

Financing – Is It the Right Choice for You?

Just raising equity or gathering small business loans will not always help you to take your business to the next level. You need to have the ability to judge whether it is the right time to invest in your business. Pooling finance from outside sources can definitely help you with your business growth, but at the same time, you need to deal with this factor crucially. You can reduce the risk factor and focus on the business growth by bootstrapping. Dealing with your investors and repaying them according to the agreement is no doubt serious responsibilities. And if not taken care of in a proper way, then it can even cripple your business. But always remember, if it is done in the right way, then raising personal finance from external sources is definitely the key to your business growth.

Do Your Business Needs Financing?

When it comes to taking finance from external sources, then you have to actually make the plan where you want to invest the amount. Without proper planning, it is possible that you spend the money carelessly and end up closing your business. You have to consider the return on your invested amount, also termed as ROI. You need to consider the amount you can get in return for the following factors:

  • Purchasing equipment and inventory
  • Opening or renting office space
  • Hiring office employees
  • Expanding retail
  • Refinancing debt
  • Solving the issue of short-term cash flow

Even before you start checking out for financing options, wait for a moment and ask yourself whether this expenditure will lead to positive returns and support in expanding your business.

What are the Ways of Financing?

Equity Financing

This involves raising the money from various third-party investors who will purchase a part of your business. This will help you to get the capital amount you need to run your business, and the investor will take a share of the profit of your company.

Loans for Small Businesses

Debt is known to be the counterpart to equity in the world the financing. Loans and credit fall under the group of debt financing. This means borrowing money from lenders and paying back in the future as per the agreement.

Do You Actually Know What Type of Depth Funding is Right for Your Business?

When it comes to debt, there are a number of options available which can serve your purpose. Assets often back debts that are available at a lower rate of interest as the security. It indicates that business that is planning to take such a loan needs to mortgage assets like collateral invoices and business equipment. On the other hand, unsecured loans do not need any collateral. But the rate of interest is quite high.

The following debt financing options are available for small-scale businesses. The one you should opt for entirely depends on your business growth stage, type and requirements.

  • Small business credit cards – Basically, repaid within months in order to avoid late fees
  • Term loans – Can be repaid within the agreed time period
  • Invoice financing- The invoices can be sold for upfront cash
  • Lines of credit- Businesses can draw money up to the maximum credit limit
  • Merchant cash advance – This is repaid via sales percentage

Also Read: Running a Small Business? Then Never do These Cash Flow Mistakes

How to Settle Down with a Lender or Investor?

It is always better that you research about the lender or investor from whom you are going to take the fund for your business. If you are checking out the options available online, it is advised that you should select a number of alternatives which you find appropriate at the first go. Then, take your time and shortlist the investors whom you think can fit your requirement bill. Give them a call without hesitation and get your questions answered thoroughly. If you find that any investor or lender is not disclosing the entire history of repayment and interest amount, it’s always better to move on to her next best available option. It implies that something is wrong behind the curtain! Also, evaluate the fees, terms as well as the long-term consequences in case of non-repayment of the sum capital. Compare all the options before finally zeroing on a particular option.

Are You Looking for a Settlement of Your Previous Debts?

Sometimes, it so happens that due to a number of issues we fail to clear off the pending debts in the market. In such a situation, the amount keeps on increasing because the interest rate just goes on multiplying. If your business requires funds, but you are unable to take it from the sources owing to the non-repayment of the previous debts, then it is essential that you get in touch with a debt settlement company.

Yes, nowadays you can easily come across a number of debt settlement companies that can help you in setting down with your debts so that you can smoothly run your business without any burden and even take new loans from the market. But remember, a number of debt settlement companies are out there in the market that is a complete fraud and try to rip customers out of whatever they can. Before hiring one such company, always go through the debt consolidation reviews. These reviews are usually written by customers who have dealt with the company before, and so you can understand the quality of services provided by them.

To know more about debt settlement in details you can check out visit here.

About Terry Godier

Terry Godier has been writing articles on Social Media, skilled business consultant and Financial Advisor for the last few years. In this post, he has written about the benefits of Social Media Marketing, Business, Finance as well as the features related to the same
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