How Business Owners Secure Business Finance
When looking for capital either to start your small business or to expand an on-going business concern, there are several options you can explore in securing business finance. For most small business owners, the first thought that comes to mind is to gain access to a loan and while that is a good source of business financing, it is only an option. We will explore the different sources of business funding for small business owners including the option of business loans. Before we touch on business loans however, you should know what other options are available.
Explore equity investment
Equity investment is when another person invests money in your business in exchange for part of the equity of your business. This means that once the person invests money into your business, you give away part of the shares of that business to the investor. This is a route that lots of small business owners favour, however before you go down that road, you need to consider certain things such as if this investor is someone who shares your vision for the company. Another thing to consider is how much equity you are releasing because once you let go of 51% of your company, you lose control to the other person.
Government grants and funding
There are quite a number of government grants available for small business owners, because the government seeks to encourage the growth of small businesses. Search out these grants for your business. You will need to meet certain criteria, but once you qualify, they are your best bet because they are considered free money as you do not need to pay back whatever money you receive. A good place to start is the Australian government business website.
Commercial loans from financial houses should be seen as the last resort because you have to pay back with an interest. Yet commercial loans are quite popular among small business owners. If you choose to go this route, decide whether you need a long-term or a short-term loan. Also, you need to qualify and meet certain criteria. A few things lenders will consider include your credit history, your cash flow and collateral, among other things. If you choose to go this route, it always pays to have a well thought out business plan. Also, don’t be in a hurry to receive money. Shop around first to be sure you are getting the best deal for your needs.