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Expert Answers to Biz Questions
Listen in! Pick up some expert advice to a reader's question that we selected from CyberSchmooz.
Ways To Raise Funds To Help Business Growth
It's so common for a young business to get started and then after a year or so you find that you are needing to expand and that often comes with cost burdens, you might need to invest in more stock, equipment or staff. You know that it's essential that you need these extra resources to realise those extra orders or customers but need to capital to fund these before you get paid. This quick guide will take you through some of the options you have to achieve extra funding.
Traditional Loans & Overdrafts
This is the oldest and most obvious route to funding you might consider. There is a difference between a loan and overdraft and you'll need to consider what type of borrowing is best for your needs? An overdraft is the much more flexible of the two options as you only pay interest when you are in the overdraft and this is suitable for short term cash-flow funding, whereas loans generally allow a much higher level of borrowing at a fixed rate over a fixed period and you might want to consider then for large outlay that will bring in extra revenue over a longer period of time. You'll almost certainly have a business bank account so it might be a good idea to check with your current account provider for a quote as they will have a note of how you are handling that account and could give you more favourable rates but you should always compare them to other lenders as well to get a complete idea of who is giving you the best rates,
Borrow From Friends & Family
Why not look into the option of borrowing from friends and family? Either tap up the old 'bank of mum and dad' or look at the option of other family members. You could even consider the option of offering them equity in the business in the way of shares rather than just a straight loan, this would give them the advantage of seeing a profit on their investment if the business does well.
Release Equity In Your Own Property
If you own your own property you can always consider releasing equity in your home to free up funding for the business. You can budget mortgage costs and look into a remortgage with tools like these, but please be aware of the risk factor in that you could lose your own home if you have not researched this properly and it doesn't work out, so be sure to have taken proper financial advice before going down this route.
Business Grants & Other Schemes
Although business grants are not as common as they used to be pre financial crash it's still possible to get grants and awards but what you'll find is they often have a lengthy application process and almost always are designed for businesses that have an interesting or unique idea or are considered innovative in some way. Generally speaking as it's an award the provider wants something they can make a showcase of.
Still Struggling?
If you are still struggling don't worry as there are various ways you can increase your chances of getting funded. Check you credit score and always have a realistic and detailed business plan, because if you can show where the revenue to pay back these loans is coming from you will have a much higher chance of being accepted.
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