Whether you’re an entrepreneurial novice looking to launch your first venture, a seasoned professional kicking off a side business, or anything in between, the question of finance will always be one of your most pressing. To help you whittle down your options and select a strategy that will work for you, here are five of the best ways to secure finance for your business:
1. Create steady cash flow with invoice discounting
Invoice discounting allows you to access finance based on your outstanding accounts receivable. By establishing an invoice discounting arrangement with a reputable organization, you can even out the cash flow instability many small business owners face. Rather than being at the whim of your clients, you’re guaranteed a stream of income that’s as steady as the work you’re putting out.
2. Enjoy flexible financing with a business line of credit
If you’re not yet sure where your money will be going or what you’ll need to spend it on, a line of credit may be the perfect flexible option for you. Rather than committing to a full loan amount, taking out a line of credit allows you to leave the funds sitting there, with no requirement for you to access it.
The beauty of this arrangement is that you only draw the specific amount you need, precisely when you need it. You then make your repayments based on what you borrowed, rather than having to pay back the full amount as you would with a traditional loan.
3. Spend the smart way with a business credit card
Much like a line of credit, a business credit card gives you access to funds with no requirement to access them right away. Credit cards come with many bonus features, including competitive interest rates, easy application processes, cash-back bonuses, points, and reward schemes.
It’s always useful to have a business credit card on-hand, both for regular and unexpected expenses.
4. Gain some valuable extras with angel investors
If you’re willing to give up equity in your business, angel investors can be a wonderful source of much more than just finance. Since they are invested in your success, they will usually also offer their expertise and guidance to ensure your business prospers.
With so much on the table, it stands to reason that securing angel investment isn’t easy. You’ll need to give them clear data and strong strategies to convince them of the long-term viability and profitability of your venture. It’s also helpful to have an exit strategy mapped out that will allow your angel investors to recover their investments.
One thing to keep in mind if you go down this path is that you will, without question, need a specialized attorney to help you structure the equity sale. Having an experienced small business accountant on your team would also be a wise decision.
5. Start small with a microloan
If you’re looking for more than a few thousand dollars but less than $50,000, then an SBA Microloan might be your ideal financing solution. These are for US businesses, so if you’re outside the US, you’ll need to research the equivalent business loan schemes in your country.
Microloans come indirectly from the Small Business Association via approved non-profit lenders. These community-based organizations offer a lot of support, making microloans a great option for newbie business owners.
As you can see, there are plenty of options for securing finance for your enterprise. By combining some of the strategies listed above, you can keep your cash flow steady as you grow your business.