If you have enough of your own funds, raising capital by convincing others to invest in your business is not an issue. However, when seeking a bank overdraft or loan, applying for certain types of government aid, or when trying to attract new investors or partners, you will need to present a convincing picture of your business’ financial condition and future prospects before raising capital.
A Loan Consultant will know exactly what information is required and how it should be presented to give you the best chance of success when raising capital.
YOUR OWN MONEY OR THAT OF FRIENDS AND FAMILY?
Personal funding of a new business may come from personal savings, money released from the sale of other assets or from re-mortgaging your home. Asking for finance from your friends and family may be a sensitive issue that can test your relationships, but people who know you personally may be more supportive, particularly if they have also run a business.
When raising capital in this manner, it is advisable to draw up a written loan agreement which should set out how, for example, you intend to repay them. This makes it clear that their funding is a business investment and not a favour.
BANK LOANS AND OVERDRAFTS
An overdraft may often be a good way to finance a temporary or fluctuating cash shortage. Where a longer-term commitment is involved, a bank loan can be the easiest and most suitable form of finance.
GOVERNMENT ASSISTANCE
The government may provide financial assistance in some circumstances. This may take the form of cash grants, tax concessions, funding of training or relocation, subsidised rents and so on. Assistance schemes vary from year to year, from industry to industry, with most assistance being concentrated in areas of high needs and future growth sectors.
OTHER SOURCES OF FINANCE
Other possible sources of raising finance available to a business owner range from debenture loans to venture capital. Alternatively, it may be possible to arrange finance from a merchant bank, some other financial institution or perhaps a research institution. Through your own and your loan consultant’s contacts, you may find new investors for raising capital.
PRESENTING INFORMATION
Regardless of which sources of funds or support you intend to approach for raising finance, you will need to present
a convincing picture of your business’ financial condition and future prospects. A Loan Consultant will know what information is required and how it should be presented.
There are many avenues for your business if your company needs capital. There are many loans in the market for small business owners and not all products may be the best fit for your business. What’s worse is, taking an unsuitable loan could be a huge setback to you personally, as well as to your business. So, an important factor is, work with your lender to determine the type of loan that fits your needs.
It is perfectly normal for successful businesses to borrow money and be in debt. Every company needs capital, so examine business financial solutions and borrow money to make money. This is not really a new idea.
A successful business has to borrow money because before a single sale can be made, there needs to be something to sell. Every business needs some form of investment before it can start trading. This could be as simple as a computer, a telephone and an internet connection. But most need more: stock, premises, marketing and something to pay the staff, even if it’s a sole trader.
Over time, the business can finance working capital out of profits, but this only comes after a period of successful trading. If the business is growing quite fast, the capital required could always be ahead of the surplus generated from trade, meaning continual borrowing is needed.
After knowing every company needs capital, including yours, asking how much it costs to borrow money is often the wrong question. The right question is: “What is the difference between how much you can make and how much it costs to borrow?”
When examining business financial solutions, you should speak to loan specialists who can set you up on a path that can get you the best business loans in a quick and seamless manner. Loan specialists also have close links with the best lenders in town and can help you compare loans and settle for a package that best suits your needs.
If you are looking for a new home loan or to refinance, loan specialists can help you get everything right from calculating mortgage repayment, comparing interest rates all through to securing the loan. And the good thing is that all their services are free of charge. So it’s all worth it to secure a loan through them. You should read up on about new home loan or Personal Finance advice.
When raising capital be mindful that different sources may be appropriate for different stages of growth. Start-ups often rely on family members, friends, or local associates. As you grow and your company needs capital, you may need to turn to alternate sources. Once you have achieved a financial track record, you can turn to other sources such as Asset Based Lending or Commercial Loans. If your company needs capital, examining financial solutions and you should also know when to to use them. It includes some options you may have overlooked, which is why it is good to engage a loan consultant.
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