If you are an entrepreneur with a lot of money saved up, the only hindrance to starting a business is coming up with an idea that will grow your money. Many entrepreneurs have the opposite problem; they have awesome business ideas but lack funding. This problem is magnified by the fact that new entrepreneurs are always turned down by banks; it is near impossible for new entrepreneurs to secure traditional bank loans. Nevertheless, there are lots of options for entrepreneurs to raise business finance Birmingham as shown below.
Use a Credit Card
This is the easiest way to finance your business. It is a risky option which when used responsibly can save you from the financial issues you are facing and even extend your accounts payable duration to up your cash flow. However, late payment gets your credit score slashed while paying just the minimum can get you in a financial crisis you may never get out.
Asset Based Lending
This works more or less like a mortgage; you borrow money against an asset. If you cannot repay the loan, the asset is repossessed. Assets commonly used as collateral include property, accounts receivable, premises, car, equipment and inventory. Asset based loans are easy to acquire but there is a price to pay; the interest rates are high. Nonetheless, they come handy when a company is in dire need of funding or when a company has a property that is yet to start making major profits.
Crowd funding works like a charity sponsorship page. Crowd funding sites allow upcoming businesses to garner small investments from a couple of investors. As an investor, you get to choose between offering rewards to the investors (products) or you can choose the equity-based model in which you give a share of your business. Before choosing a crowd funding platform, be sure to read the fine print and understand what you are getting into. Understand that most of these platforms will claim a percentage of the money raised and will charge a payment processing fee. Crowd funding sites offer a great marketing platform too.
Peer-to-Peer exchange offers you a chance to meet private investors who may be interested in funding your already running business or your business idea. The sites allow you to create a personal relationship with the lenders thus fostering trust. This space has helped many well established companies. The beauty of this business finance Birmingham method is that it waives all loan application fees and slashes interest rates for entrepreneurs who make early repayments.
If your family is supportive and they have money to spare, they can help you raise your business from zero to a place where it can sustain itself. The good thing is that relatives can trust you with their money and will probably demand lower interest rates and incentives than a bank.
This is like getting a partner who is willing to invest in your business and offer advice. Angel investors are seasoned investors who are willing to offer you funding in return for a percent of your business. It is easy to get an angel investor; there are online sites that link you up with investors and offer you advice on how to create a winning pitch.
In conclusion, it is advisable to vet any finance provider or model before making any commitments to ensure you get the best solution for your business.
Posted in: Business Financing