Whether it’s simply a short-term loan to get you started or a longer agreement that will enable you to make a name for yourself, most business owners will need to take out some form of financing in their company’s lifetime. There are a number of different ways you can fund your next business venture, from dealing traditional institutions to taking advantage of the digital, all-connected world we now live in. Read on to find out which approach would work best for you.
Commercial loans from traditional financial institutions, like a bank, is the most common way to finance a new business. These typically operate on a short-term basis–between thirty days to one year–and are secured by some form of collateral. This could take the form of a property or, if you’re taking out a smaller loan, a car or even your company’s remaining inventory. Unless you have an excellent credit rating, utilising your collateral will play a major role in the finer details of your loan. Not only will it affect the interest rate that you’ll pay going forward, but it will also help to legitimise your claim with the lender.
Credit facility agreements from companies like Ebury allow businesses to take out an umbrella loan for generating revenue over an extended period of time. The money from this loan could be spread across numerous departments within the company or even another project entirely. These types of loans are popular because they allow business owners to access a consistent and reliable stream of capital that you can use to eliminate any significant gaps in your cash flow. Not only is this a much more flexible approach, but it’s also much faster. Removing the time admin process of taking out another commercial loan could be the difference marketplaces that rely on quick-decision making.
More recently, we’ve seen the popularity of crowdfunding websites like Kickstarter and Indiegogo increase tremendously. This allows people from all around the world to contribute individually to the overall funding of your project. This kind of approach isn’t for everybody though. In fact, according to statistics more than half of all projects fail to reach their target. If you want to really catch the public’s imagination, you’ll need a unique product that stands out from the crowd and entices customers to commit to the higher-priced tiers. This is usually done by offering bonuses, like one-of-a-kind merchandise or even the chance to meet the design team in person.