Funding one’s business may require one to look for additional sources of the funds. This article will highlight some of the ways to get funding for your business. Some may be costly given the high-interest rates that are charged by the funders of your business which end up increasing your expenses hence diminishing your profits
Getting Funding For Your Business
This involves the selling of one’s account receivables to another party. It is a method that is viable to a growing company. However, it may not apply for companies that are shrinking. The main disadvantage is the cost of this type of funding since sometimes the commission may be up to fifteen percent which is very high hence one gets less money from it. This method should be used minimally or even avoided due to the high cost involved.
Use of retirement accounts
This type of funding is interest-free if one pays the money back within the stipulated time period. Neither is fees paid if it is paid on time. Being one’s retirement money, it is risky if one may lose the business. One should invest the money in a business they are sure of getting returns from it.
Grants from the government
This is given to companies which meet certain requirements and provide the needed documentation. In as much as it is free money, the business has to provide reports on their financial performance and how the money was used.
Peer to peer lending
One may get funding from people they do not know but have the capacity to fund your business. However, the much one is given, is dependent on their credit score, how long they will take to repay and their justification of why they should be funded. It is also important to note that they have very high interest rates.
One may try to win some money by registering their business in business competitions and contests. Some of the contests have huge price giveaways in the form of investment funding for the winning business. Even if one does not win, they end up getting more experience, mentorship, and knowledge of managing their business.
The other alternative to competition will be being part of a business incubation program. This is especially to new businesses. One ends up getting investors and mentorship for them and their business. The mentors will follow up with you to ensure your business succeeds since they have invested their money in your business. One should be careful to consider such programs from companies within their industry to ensure they have higher chances of being absorbed.
These are loans given to businesses. They depend on one’s sales, experience and the market opportunity the business has. According to FundingAnLLC one can receive financing for their business without security.
This works for a business which the supplier relies on a particular company. The vendor may decide to fund your business to ensure that his business also stays on the market since your business is the supplier’s major outlet.
Other forms include barter where one can exchange the assets they do not use to get better assets or even more money to run their business.