As the industries and their potential to give the maximum service and product base to customers worldwide, are growing at a phenomenal rate, the challenging part comes in when the financing aspect to fund the new business or an existing business is worked upon. the very thought to come up with different ideas, strategies to pool in the resources to fund the business in a dynamic and thought-provoking economic condition has been a tough process altogether.
Looking at different solutions to find the right kind of finance to fund the business is important for the performance and growth in the near future and to sustain them in the dynamic business environment. Different techniques to finance the business are highlighted to help in procuring the best-suited solution to run the business
- Factoring –completely selling the receivables at a discounted rate to get the upfront finance to fund the business with a poor credit rating is an expensive yet the better way to finance the business line, like the textile industry where the orders have to be filled in before getting the payments this again is made competitive with Receivable exchanges making the funding option pricey yet manageable for medium production company with the hedge funds where the invoices are sold in bundles ,as the bidding happens on the invoices procured
- Bank Loan- one of the most traditional ways to finance the business with required funding options for industries are always resorted as the first mean to obtain loans by businesses, today many banks have tailor-made financing options for small enterprises who apply for a loan to grow the business potential
- using the credit card to overdraw the credit limit is another option to fund in the immediate requirement of the business, though it is a riskier option, one can opt this mean if the interest is paid in small amounts regularly, as one payment default will add up the interest more than twice
- starting a new business, yet there is no fund as there is no employment, the right time to tap the 401k account, this is a direct way to eat up the fund saved for future retirement stage, however can be used by filling inappropriately without having to pay the penalty, though it is complex, help is available to fill in the forms correctly and use the funds saved for future
- pledging some of the future funds saved for the hay day can be well invested right now however involves a lot of risk, the personal contract to give up a certain percentage of future earnings is not regulated and thrust funding should be done cautiously
- crowdfunding has become a popular option when the business plan and idea is clear and users can log into the social media website to avail the funds contributed by viewers to kick-start projects
- Angel investor is a popular concept which is catching up the startup industry, the genuinity of the idea, clear thought process of communicating the idea to the angel investor to fund the business is important
- Small Business Administration Loans are backed by the government, are new ways to fund the business, which support special fees, guarantees for small business
- opting for a microloan for a short-term fund crunch can be availed between $500- $35K
- Borrowing from family and friends has been the history of many successful ventures, and repaying them once the business is prospering.