Learn of the different methods to raise finance for business startup and growth and to cover all operational expenses.
Finance for Business
There can be various methods to raise finance for a business. Some people need finance for business startup. Others need for business growth. Mostly running businesses need additional money due to various reasons like funding operations or for expansion, etc. The effectiveness of the method however depends upon the way it has been used as well as on the condition of the business. Read below the various methods to raise finance to help you in this regard.
Invest yourself to raise finance for business
The best way to raise money for business finance is to invest your own savings in it.
Investing in stocks, bonds and other securities can be a great option in your financial goals to build good personal finance. With a proper investment strategy, you can divide your surplus by diversifying properly for short, medium and long term investments. The proper portfolio mix can bring you good returns. You will not only earn interest on your investments but capital gains as well.
You can mortgage as well as second mortgage your property for this purpose, if you do not have enough money in cash or in bank account. The main benefit of this mode of financing is that you have full control of your business. Outside of this method you could be working under pressure for the shareholders and stakeholders.
Ask family and friends
The second best method to raise business finance is to ask your friends and family to help you in this regard. Their terms of financing your business can be better than banks and other financial institutions. Repayment in this case can be easier than banks.
Borrow from your bank
If you are raising money for a running business then you can also ask your bank to provide overdraft or loan. These will be useful for expansion or settling financial transactions. This is one of the functions of commercial banking. The interest rate on the business financing organized through bank overdraft can be flexible as they charge interest only on the amount used by your business. It is a better option than the bank loan at higher interest rate.
Invite external investors
Another good way to raise business finance is to issue shares for public investors. Your company’s financial statements such as cash flow and balance sheet will be necessary for this. Standard shares basically provide no rights or restrictions to the investors regarding the return of their money. Another benefit of inviting external investors is that they can also provide you with expertise to make your business better than before.
Bank loan on firm’s guarantee
This method of raising business funding is good for small businesses. The business owner need not furnish his personal guarantee for such loan. The state government works as a guarantor of the loan thus taken. However, you will have to pay an annual premium on the outstanding amount of the loan. Such loan has to be repaid in a fixed number of years as per the terms of the loan.
Thus, there are a number of methods that can help a business in raising business finance for its betterment as well as expansion, at easy terms.
Learn More: The information presented above should be of great help. You have see some of the different ways that finance is raised to meet the needs of individuals, government and businesses. If however you need more you can contact us for more on finance for business for additional details. You can also read more from the book wisdom of finance you can buy at amazon.