When you are running a business there will inevitably be times when you need extra finance or capital to hand. You may need this extra finance for a new product launch, or you may require it to grow and scale your business. Whatever you need the finances for, it is important to know how much you need, and where to get it from. Borrowing money for your business needs to be carefully thought out and planned. Do not rush the process, because you need to be sure that you can comfortably pay back any money that you are borrowing.
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How Much Do You Need – What is Affordable?
Before jumping in at the deep end, you must establish how much you need to raise, and what you need to raise finance for. You will not be able to convince others of your potential, or your needs and necessities if you are not aware of them first. So, are you needing more capital for hiring additional team members, or are you looking to level up your marketing and promotion efforts? How long do you need to borrow money? When you have a targeted plan for funding, you will find that raising finance is easier to do.
Business Banking Loans
Looking at taking out a business loan from the bank you use may be affordable, and it might be ideal if you are looking at raising a large 6-figure sum. However, you must be wary of business loans, because they can start off affordable, for the first year or so, but they then can rise with inflation after the initial introductory period. When looking at business loans, you need to look at the cost of borrowing, as well as the length of borrowing.
Looking at Personal Loans
If you have assets that you can sell to raise funds for your business then great, if not, then look at taking out a personal loan. Personal loans are often more affordable and easier to obtain than business loans. If you own a car you may also want to look at Logbook Loans through a provider such as Car Cash Point because a logbook loan will give you the chance to readily free up the cash you need by utilizing an asset that you already own.
Getting other people to invest in your business may be what you should look at. Crowdfunding is ideal for getting a new business idea off the ground as quickly as possible. However, you must weigh up how much of your business you are prepared to share with others. Quite often with crowdfunding, you will get investment from others, but you will have to sacrifice a share of your business, or perhaps profits for the next few trading years. Crowdfunding can be a quick way to secure funds, but it can be unreliable – so proceed with care and caution.
Turning to Friends and Family
Reaching out to friends and family might not be your first port of call, and it might not be ideal if you are seeking large amounts of money – however, it could still be an option. Preparing a business plan and proposition for your family and friends, and being open, clear, and honest with them about what the funding and financing will be used for is your best way of raising (and securing) the finance that you need.