How Funding can Help a Small Business

Small businesses with limited cash often find themselves facing something of a conundrum. They need bigger premises, more staff, more equipment or more stock in order to take on new contracts, which will bring in lots of new revenue. However, before they can take on these contracts and generate this revenue, they need cash upfront to make all of the required improvements. The answer to this problem is funding, which can help to plug the financial shortfall.

A small business loan can help you to:

  • Employ talent. In many start-ups, there is one person trying to do everything by themselves. But to really thrive, your business needs specialists. For example, a marketing expert to properly promote your brand, or a sales consultant to help you bring home those big clients. While a loan isn’t usually used to pay someone’s wages, it can free up cash from other areas of spending (i.e. stock or equipment) that you can use to attract the talent you need to drive the business forward.
  • Buy equipment. If a new piece of equipment can help you double your productivity or vastly streamline tasks, this means far more revenue. Using funding to purchase it is a great idea, as the boost in revenue and productivity means it will pay for itself in no time.
  • Buy stock and fulfil more orders. If the potential is there to take on many new orders and contracts, but you’ll need a cash injection in order to buy the stock to fulfil these orders – it makes sense to use funding.
  • Move premises. Is your existing premises bursting at the seams? Would moving to a larger office space allow you to bring in more staff and equipment, to increase productivity and revenue? If the answer to either of these questions is yes, you can use funding to be able to afford the lease or purchase of a more suitable property.

Using funding to invest in these crucial areas of your business should soon start to show benefits, helping you to grow and expand your operation. However, it’s very important to be realistic, practical and cautious about how much you borrow and how fast you expand. Gradual and carefully considered expansion is often the best method to adopt.

Business funding

Types of funding

There are several routes you can go down to secure the funding you need for any of the aforementioned goals. You can use an ordinary small business loan or consider cash advance loans – or even go down the crowd-funding route.

Before you start searching for funding, it’s important to sit down and assess exactly how much you need and what you need it for. An investor or funder will need to see precisely how the money will be spent, how it will help the business and how the money will be repaid. In short, you need a solid plan in place for business growth.

It may be a good idea to seek professional financial advice, and to take your time considering your options before applying for funding.

How to Get Your E-commerce Business Idea Funded

Introduction

As technology has taken over the marketplace with ecommerce many entrepreneurs decide to begin there journey with an online business. It makes sense; online businesses are attractive options due to the gaining popularity of ecommerce among consumers across the globe. And, in most cases, online businesses require less capital investment as compared to traditional models, especially stores selling goods. However, it is not without a justifiable amount of seed money that you can start and online business, it does require its share of capital. This article discusses how to understand you’re the financial requirements of your online business idea and subsequently raise the funds needed.

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The business plan

The entire saga begins on paper with a watertight business plan. A well researched and carefully drafted business plan will help you understand the real requirements of your online business. Once you start penning down the details, you will be surprised at the number of revelations a business plan surfaces. Many new factors will come forward and you will become better prepared to take on the challenge.

You must include every facet of your business in the plan and take the pain to make each sectioned meticulously detailed. Special focus must be given to the financial section for that is where you will determine how much money you plan to invest and what are the revenues you are aiming at. This section will also be the first one your potential investors will scrutinize.

Roping in the Investors

Unless you have existing sources of steady incomes that generate extra cash, you will need to approach funding sources or lenders in the market. Banks are usually more interested in funding traditional businesses over virtual ventures. However, this trend is slowly changing and some banks are considering online businesses for loans. It is a difficult option but also one which shouldn’t be ignored.

Your friends and family can be a great source of funding if they are willing to show confidence in your ecommerce plan and back it up with their money. Don’t for a moment think that a smile and familiarity will get you through to their bank accounts; the only way is to present a solid business pan with exact future projections.

Other more professional lenders include angel investors, venture capitalists, peer and peer lenders. These lenders can we found through the internet and funding is again based on the promise that you business plan brings to the table. These types of investors are usually fully involved in the business they invest in, as a result, their levels of interest in you plan and projections will be much higher than your acquaintances. Some might loan the money to you on interest while most will be looking for a stake in the business.

Whoever you approach you will need to be presentable and show credibility. Any financial source who will bet his money on you and your business plan will need to know that they are going ahead with a trustworthy person and a feasible business plan. It is your job to portray these requisites and get your funds releases.

About the Author: Penny, the author, is an expert associated with Ezbob.com, an online financial solution for that provides instant business loan to e-commerce and other online traders for their working capital and operational expansion requirements.

How To Raise Capital For Your Business When Your Bank will not Help

Raising capital for a business seems like it should be pretty straightforward. It’s not. Banks often want you to post significant collateral for your business. If you’re just starting out, you probably don’t have anything that the bank can hold as security for the loan. While that might seem like a major roadblock, you can overcome this by raising capital through other sources.

Angel Investors

Angel investors are people who invest in businesses in exchange for a share of the profits that you generate. These investors are always accredited investors and act as either direct advisers for your company or as major shareholders. You have to be incorporated in order to attract angel investors, but many companies exist to make this process easier for you.

For example, the Go BIG Network Investors’ Circle are networks that connect you to angel investors. Inc.com also publishes an updated database of angel investor networks so that you can stay focused on developing your business.

Reverse Merger

Going public is one way to raise funds for your company. By going public, you can issue shares of your company to the general public, and investors will buy those shares from you. The money you get from those investors can be used for any business-related purpose. Of course, investors become part shareholder in the company, so you’ll need to work for your investors’ best interest by growing the company.

Shareholders can also vote on who remains on the board of directors and can affect the direction of the company indirectly through this type of voting. While going public is often expensive, there is an easier way to do it than issuing an initial public offering (IPO). It’s called a reverse merger. A reverse merger is when you purchase an existing public company that has failed, but is still public. Once you buy the company, you structure it so that it buys out your existing, non-public, company. The result is that you now own a public company and can sell shares to the public and raise the funds you need.

Peer-To-Peer Lending

Peer-to-peer lending is a relatively new form of lending when compared to traditional banking. It refers to the process of borrowing money from private investors, using a traditional bank as the intermediary. Companies like prosper.com exist entirely for this purpose. Investors sign up to the website and loan money to promising borrowers.

The loans are typically repayable within 3 years, but you may negotiate the interest rate on the loan. After you place a loan listing, investors bid on your loan. The bidding process is part of the funding process. With each bid, your loan becomes partially funded. An investor may contribute $50, $100, or $1,000 or more towards your total loan amount. Instead of one bank funding your entire loan amount, many investors make a partial contribution to your loan. When your loan is fully funded, the financial intermediary sends the money to your bank account via a direct deposit transaction.

Factoring

Factoring is similar to a cash advance. A factoring company advances you money based on your current accounts receivables. In other words, you sell your invoices to a factoring company, and that company advances you an amount of money equal to 75 to 85 percent of the total value of the invoices. The factoring company may also charge you a fee on top of the discounted rate it advances you. This is a good option if you need liquidity now, or your company is starved for cash and it normally takes you a long time to collect on your invoices.

About the Author: Guest post written by Elizabeth Goldman and brought to you by Wonga – the short term loan experts.

5 Ways To Raise Capital For a Business

One of the major challenges before any entrepreneur is to raise capital for his business. This becomes more important for a new entrepreneur as he starts the business without any contacts or experience. No doubt, a business plan, office, workers, contacts and and many more things are involved with a business but raising capital is the primary challenge. There are a number of ways to raise capital for a business and this post covers detailed information regarding those methods.

Loans From Banks

One of the easiest methods to get the required capital for a business is to take loan from a bank. In order to get loans from banks, you will have to submit security worth the loan amount. Even after the easy availability of loans, most of the entrepreneurs avoid bank loans as a medium to raise capital for business. This is bank loans are associated with high interest rates and various other complications.

Venture Capitalists

Another method to obtain necessary funds for starting a business is from venture capitalists. Since venture capitalists are very strict with approval and sanctioning loans, you must have a solid business plan based on an innovative idea. If the venture capitalists are impressed with your plan, you can easily get the required capital. In return, you have to provide them some equity in the business. One of the merits of this method is that you also get the opportunity to benefit from the experience of venture capitalists. As a result, you can modify your plan on their recommendation which can improve the chances of your success.

Private Investors

There are a number of people who are looking to invest in fresh business ideas. Most of these people are business man that want to diversify their income sources and thus are ready to invest in projects of other people. All you need to do is to search few private investors in your locality and then explain you business plan and possible returns to them. If you are able to convince them, you can easily raise the required capital for your business. Again, you should do proper planning before fixing a meeting with private investors. You should be able to justify your budget and business plans. Also, explain the whole plan from the perspective of the investors also so that they feel interested in the project. Once you have made good relations with private investors and showed him your potential, you can expect monetary helps for future projects also.

Family

If you cannot afford to pay the interest rates of banks or individual investors, you can ask your family and friends for help. This is one of the most conventional ways of generating capital for a business. These people simply give you the money for the bond they share with you.

Friends

If you are taking monetary help from a friend, you should offer him some share from the profits. Again, your attitude also plays a vital role in convincing your family and friends for investing.

About the Author: Our friend Sara Muler at www.loansforpeoplewithverybadcredit.net provided this free guest post. Please check out her website when you get a chance.

Finding the Cash to Start a New Home Business

You may have an excellent business idea, but lack the funds to get the business off the ground. This can be frustrating and often results in many people giving up on their dreams. While it may be difficult to find funding, it’s not impossible. There are a number of funding sources for small businesses. Whether you opt for something traditional or something new, you can find the money you need. Here are just a few tips for finding the cash to start a new home business.

Social Lending

If you’re afraid to approach a bank about lending, why not approach your peers? Social lending is a great option for new businesses. With social lending, you put in a request for the amount of money you need and then other individuals will fund the loan with interest rates that vary from less than 7% up to 35%. You will need a good credit score in order to get the money you need (660+) and it may take a while to get the funds you need. However, this a great, non-traditional option that is on the rise.

Local Investors

Another non-traditional method is to find local investors. A trick for doing this is to explain your business and offer free services for a period of time in exchange for start-up money. For example, let’s say you want to start a beauty salon from your home. You could offer free haircuts for several years or even a lifetime.

Government Programs

Small business has become big business with the government. There are a number of grants, loans and other financial programs that have been created to help small businesses. Start with your city government then move on to the state level and then the federal level. Chances are you’ll find at least some money to get you started.

Banks

Last, but not least, banks are the most traditional option. However, you will need to have all your ducks in a row before applying. This means having a great credit score and creating a business plan. You should also practice what you’ll say so that you are able to present your business idea in a professional manner.

There are a number of funding sources when it comes to small businesses. However, knowing about several different sources can make it easier to get all the funding you need. Just remember to only borrow what you need and not get in over your head.

About the Author: Brandon Reauish loves working with small businesses as they work to get their projects off the ground. He works closely with a logo design company to ensure each business he works with has a clearly defined brand.

Finding Money for Your New Business

If you are thinking about starting a new business, chances are you are looking for ways to finance your new venture; very few entrepreneurs have saved enough money to launch their businesses without outside funding. The number of choices available to entrepreneurs for business financing can be bewildering, but some of the most popular options are below:

Bank Loan

This is perhaps the most traditional route for entrepreneurs to obtain financing for their new businesses. Banks have a large source of funding available to them, even if they are less than eager to lend it out in this economic environment. However you will be hard-pressed to find a better interest rate on a business loan than from a bank. Of course, in order to get that prime interest rate, you will have to jump through a few hoops. Most banks have very strict lending standards, and they will want to see a detailed business plan that specifies your goals and profit projections. Although this is a time-consuming task, it is something you already should be doing.

Credit Cards

If you are unable to acquire a bank loan, it is always possible to finance your business with a credit card. The benefit of this approach is that it does not require approval, which greatly expedites the process. However you will pay for this speed with a very high interest rate on the borrowed money. This will put extra pressure on your business to become profitable quickly so that you can pay off the debt on your card. Generally speaking, credit cards should be considered just a short-term source of cash.

Family and Friends

Another way to finance your business may be to obtain money from family and friends through a personal loan or by selling shares of ownership in the business. Family and friends will tend to be far better partners than a bank, which may be quick to call in a loan if things go poorly at first. However tensions could easily arise if the new business eventually fails, which could lead to considerable tension within the family as everyone wonders where their money went. If you decide to go this route, it is very important that you clearly spell out the risks associated with a small business before asking for seed money.

Of course, there are many other options available to the budding entrepreneur, and you would be wise to investigate many of them. There is a lot of money available to finance new businesses, and if you have a good idea, there is a decent chance that you will be able to obtain some of that money for yourself.

Article provided by Touch Financial an online business finance service and solution company.