Sources of Short and Long Term Business and Enterprise Financing


iness financingOne of the earliest sources of funding is your own income. No one wants to bite more than they can chew, especially when it comes to getting serious financing or investing a lot of money that is irretrievable when starting a business. When you start a business for the first time, you are usually as small as possible. If you still hold your job, you can use your monthly income from work to finance the start of your business, little by little to prove the concept.

Cost and Risk: Every business is opportunity, and cost and risk go hand in hand, sometimes using the savings made for other personal goals, are part of success, losing interest on the money if it had been invested as well. Or, borrow money from third parties like friends and relatives and other side of the game.

Sources of Commercial Financing

But these are just a few examples of how an entrepreneur or entrepreneur can use his or her saved money for years to buy a house, apartment or other good-looking place to start their business, many get with close people, and that money turns into debt that can be Priceless if things do not go very well. Anyway, below we list other sources of commercial financing very useful for financial emergencies.

1. Credit Card Financing


There comes a time when you need to invest significantly in your company and look for more affordable funding sources . Many people do not have thousands of dollars on the table to dump in the purchase of raw materials, equipment or supplies for a commercial venture. For many people, the easiest business financing method and personal loan for business or use a pre-approved credit card limit to use the thousands of dollars you need to spend to accelerate your business.

Cost and Risk: You will pay very high interest rates ranging from 12% to 24%, in which case the risk is to fail to pay the bill, and if your business fails the debt becomes an unmanageable snowball.


1. Credit Card Financing


2. Financing with family and friends


Your friends, relatives and family want to see you succeed, not all, but most want, rsss, fortunately. They may be willing to lend some money or buy a stake in your company if they believe it can work. You can configure the terms of a contract as you see fit.

Cost and Risk: costs will be determined by the agreements entered into with your investors friends and relatives. The biggest concern is the big personal risks due to the consequences if your business does not work, surely your friends and family will not get the money back and this will generate problems.

3. Business Plan Competitions


For innovative and larger business ideas that need commercial funding from the outset, entrepreneurs and entrepreneurs can resort to competitions for business plans, innovation challenge, ideas contests, business games, etc. Their plan is presented and compared with those of other competitors, and winners can snatch up to $ 100,000 or more in funding for the company to start operating or expanding.

Cost and Risk: It is minimal. Your only costs will be applied in accommodation and transportation to where the competition is being held and the time you will spend in preparing.

4. Funding with Investors Angels

4. Funding with Investors Angels

Entrepreneurs seeking to make money from significant value financing may also be angel investors. Angel investors can be friends and professional investors and venture capital groups. These investors are often retired executives and successful entrepreneurs, and are willing to invest small and medium amounts of money in the hope of profiting from the investment.

Cost and Risk: Like any external investment, the angels will demand that the debt be convertible or equity interest in the company, each case is a case.

5. Commercial loan financing


To make it easier for small business bank and financial loans to be accessed, you will need a solid business plan and usually a proven concept before you apply. The ideal is to get the requirements to request to know how difficult it can be.

Cost and Risk: your main cost is the risk of taking out a loan for your company and paying interest, in this mode you guarantee smaller amounts of funds than with private investors.

6. Financing with risk capital


One of the biggest forms of business investment today is Venture Capital. Venture capital groups group money from investors and take calculated risks from startups, fintechs and innovation companies. Investors listen to dozens of candidates every year, but only invest in a small number of entrepreneurs.

When they invest, they invest heavily – usually in reach of millions of dollars. Venture capitalists will normally require a board of directors, a board seat and one always have a well-defined strategy. The goal is typically to sell the company to an acquirer or make a public IPO within 5 years.

Cost and Risk: Venture Capital is a classic “think big” mentality. Investors will want a significant portion of your company’s capital. Entrepreneurs who are willing to give up some of the shareholding control mean that this company has a greater chance of success.

Now that you know some of the sources of financing for companies, what will it be?

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