Find More Flexible Options For Financing Your Business

On November 15, 2012, wrote:

When you own a small business, you must find a way to finance your business operations so that you can make it while you are generating interest and leads. With so many different types of alternative funding, it is important for small business owners to do their homework so that they can choose the most flexible and practical financing options. By understanding the pros and cons of flexible financing options, you can choose the most affordable funding options that you will not regret. Here are the highlights of the most flexible financing options that you should consider when you are constructing a detailed business plan.

Apply for Business Grants

If you plan on centering your business around technology, securing a grant through some of the many Small Business Administrations is a possibility. One of the upsides of grants is that the money that you receive is free. Most investors love that grants provide a great deal of leverage. By setting aside enough time to work with a government agency in your region or state, you can qualify for thousands of dollars to build your business. With this being said, you must remember that grants are highly competitive. You are also limited as to how you can use the funds that you receive when you do qualify for a grant.

Equity Financing Options

If you do not want to take time to fill out grant applications and proposals, alternative methods of financing are far more practical. You can consider being financed by a private institution or a group of private investors who will give you money in exchange for part ownership in the equity of the company. Because the investors will have equity in the company, this type of financing is called equity funding. When you go this route, you need to make sure that everything is done legally. If you do pitch your opportunity to investors, you need to be working to grow your business quickly. You also need to be planning to go public within the next 3 to 5 years. With this being said, you will receive the money you need to grow without worrying about paying interest.

Debt Financing is Typically the Most Common Choice

As you can see, you do have options. But out of all of the most flexible options, debt financing is truly the most common option that small business owners choose to fund the business endeavors for a number of different reasons. Business owners can qualify for money from financial institutions. This financing comes in forms of small business loans or in the form of lines of credit. You will receive a repayment schedule, pay interest for the money borrowed, and use the money you need to keep up your cash flow. One of the biggest advantages of applying for a line of credit is that you do not have to give up equity in your business. You also do not have to worry about trying to apply for grants that can take months to receive if you ever receive them at all.

Credit options through lending institutions are often the best choice for small business owners who need money quickly. If you do not have enough money in your savings to handle all of the business expenses you will take on after you open your doors, make sure you choose wisely and compare each option available. If you choose the right financing, you can build your business and an image that customers will not forget.

About the Author

In addition to studying business finance, Aaron Gormley has also studied the effects of social media on young people in the public eye such as  Kendall Jenner and Austin Mahone.


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