As business owners, do you have big plans for the future? Well, whether you want to start a new business venture or expand the operations of your existing SME company, one thing’s for sure—you must obtain and secure the funding you need. However, navigating the world of business funding can be challenging. Sometimes, you have yet to learn the ropes of it. Take note that each funding method has upsides and downsides. So, it’s essential to weigh your options carefully.
Likewise, also note that before you seek or apply for any funding, you should have a solid business plan. You should have your financial data to communicate your well-organised approach to how you will utilise the money. Financial data helps you see why your business is a good risk for investors and lending institutions.
So, where should you start?
In this blog post, we’ve compiled and identified the different sourcing methods to fund your business. Thus, we will also tackle how our powerful cash flow tool—Moolahmore—can help you get your business funds easier.
Where To Get Financial Backing For Your Business
Different Funding Sources to Look Into
There are two broad ways how you can raise funds for your business. The first one is debt, wherein you can retain your business ownership. With debt, you have an obligation and commitment to repay your investors later on. On the other hand, with equity, you don’t need to repay your investors. However, you’ll give up a part of your ownership in your company.
Keep reading to learn more about the different debt and equity funding sources.
A) Borrowing Options (Debt Funding Sources)
Business loans can be obtained from banks, credit unions, and other financial institutions. They come in various loan sizes and terms. So, it’s essential to find the right loan tailored to your business-specific needs.
There are several key things to keep in mind before applying for a loan:
- The terms and conditions of the loan must be agreeable to both you and the lender.
- The interest rate on a business loan can vary significantly. So, it is vital to find out what rate is offered before you commit to borrowing money.
- Be prepared to pay back your loan on time. Falling behind on your debt could take a hit on your credit score, which may lead to serious consequences for your business.
Remember, a good credit score and reliable assets can help your business get approved for a loan and secure a good loan rate, even if you don’t have a high net worth.
B) Investing Options (Equity Funding Sources)
Angel investors are generally wealthy individuals willing to back your business financially; in exchange for getting a percentage of control and profit shares of your company. Both angels and venture capitalists always look for promising businesses, but angel investors typically invest in early-stage companies rather than already established ones. Thus, these investors may impart their advice and expertise for your business growth which can be as valuable as their money.
Venture Capitalists (VCs)
Similar to Angel investors, Venture capitalists are a group of professional investors who take equity in your business in exchange for funding. VCs rarely invest in new companies unless a significant profit potential can be pointed out and measured. Likewise, if you plan on approaching VCs, you’ll need an invincible business plan, a solid strategy and a compelling case for investment.
This particular funding enables you to raise capital online using a handful of excellent crowdfunding sites. With crowdfunding, you can pitch your ideas, share your proposal, launch your products, and wait for interested parties—whether casual investors or seasoned capitalists to donate. Thus, crowdfunding can be done in exchange for either rewards or equity.
C) Other Funding Sources Options
Also known as self-funding, bootstrapping is the easiest way to fund your business. This type of funding allows you to tap into your personal financial resources, such as your personal saving accounts, personal loans and personal credit lines. With bootstrapping, you don’t have to give up any equity or ownership, and it is usually interest-free; no wonder most small businesses started as bootstrapped. Thus, when you can no longer use your own money to keep the business running, you may need to look at other financing options.
How Moolahmore Can Help You Get Business Funds Easier
To fast-track getting funds for your business, you need to utilise a top-notch and mobile-enabled cash flow management tool like Moolahmore. Moolahmore can keep your cash flow visible because this powerful software with accurate tracking and excellent forecasting capabilities enables you to easily see how your business’ ins and outs are performing in real-time at any period. In addition, you can also produce financial data or reports with comprehensive analytics and comparative analysis in just a snap with Moolahmore, which you download in either PDF or CSV formats.
Cash flow visibility and instant access to historical financial data can help secure the extra funding you need from potential investors and lenders relevant to your business capital and expansion.
The Bottom Line
In conclusion, there are many different sources of funding available. Therefore, it’s salient to weigh your options thoroughly and choose the funding method that aligns with your business goals, objectives and specific needs. In addition, ensure that your funding requirements are also valid and complete. With the right funding, you can accelerate your business growth and reach new heights!
Make business funding easier with Moolahmore! This powerful financial tool that allows you to track and visualise your cash flow position accurately and easily access your historical financial data can aid in helping to secure future investments, raise capital and fund your business growth. Request a demo today!