Finding the right financing services in economic climate can be a tough task. Whether you are planning for start-up funds or capital to expand your business, it is tough. Even if you need money to hold through tough times, it is tough. But, depending on your current state affair, securing fund can be tough. To help you with financial services, you might have some ideas on various financing techniques available, that you should know about while pursuing them.
You can try factoring:
Factoring is always a finance method, where the firm gets to sell its receivables at discounted rates to get up front cash. This form of service is designed for firms with poor credit or by some businesses, which need to fill orders long before the payment has been made. Well, this is an expensive way to raise some funds! Companies selling receivables will pay fee that is a percentage of total amount. If you end up paying 2% fee to get the funds in advance, it is equal to annual interest rate of around 24%.
For this reason, business might have gotten bad reputation for some years. That being out of way, economic downturn has forced firms to check for alternative finance methods. So some companies are trying to make factoring competitive enough. The exchange will help the companies to provide some receivables to multiple factoring companies. The lenders will then bid on invoices, which can be sold in bundle or one at time.
Focus on getting a bank loan:
If you are in debt, then it is better to head towards debt settlement reviews first. In case you are not into the shackle of debt, you can always log online and get a bank loan instead. Lending standards have no doubt got a lot stricter than before. However, there are some banks like bank or America and more, which have earmarked added funds for some of the smaller business lending companies. So, you can always apply under those names to get some monetary help to finance your business. You have to fill up a loan application first and then head towards the right option.
Plan to get yourself a credit card:
Using credit card for funding business is quite a serious risky business. If you ever fall behind the payment scale then the credit scores can easily get whacked. All you have to do is just pay the minimum every month and it will help you to create proper hole whenever you want to get out of it. However, you might have to check the service responsibly. For that, a credit card can help you work your way out through occasional jam and get the chance to extend accounts payable periods to shore up cash flow. There are some easy ways available to finance business with credit cards.
Work your way out to 401 (K):
In case you are not employed and planning to start owning a business, those funds accumulated under 401 (K) can be a pretty tempting option. Thanks to all your provisions in tax code, you can easily tap into those funds without any penalty if you know the right steps to follow in this regard. The steps are noted to be quite simple but complex legally. So, always get in line with someone experienced in setting up C Corporation. Then talk about the perfect retirement plan to roll retirement assets into this field. Always remember that you are down into investing retirement funds. So, if the things did not go as planned, you might lose your business and your egg as well!
You can go for crowd funding:
There are some well-known crowd funding sites available, which are effective and fun ways to raise money for creative and relatively low costing project. You need to set a goal first for the amount you money you are planning to raise over a certain period. Your family, friends and even strangers will t hen use the site to ask for some monetary help. Reliable crowd funding site namely Kick starter has already funded around 1000 projects.
But remember this kind of monetary help is not for long term projects. It is designed to facilitate asking for and presenting support for some single off ideas. Most of the time, the project creators will offer incentives for pledging. There is no chance of long term ROI for supporters. There is no ability to get some donations for tax related purposes. But, still, these points have not stopped around 100,000 people from pledging into crowd funding platforms.
Pledging your future earnings:
Ambitious and young people always have the urge to bet on future earnings. They are working their ways out to raise money. With the help of trustworthy name like the Thrust Fund, some people have offered percentage of future lifetime earnings on behalf of undesignated and upfront venture funding. The idea might sound quite great and so many people have already tried it. But, you have to be aware of the legality and enforceability of such personal investment contracts.
Going for an angel investor:
There are some odd rules applicable while pitching an angel investor in your business. You have to avoid all kinds of jargon, be succinct and have exit strategy. However, the economic turmoil of last few years has made a rather complicated game quite trickier more. There are some ways you can win over angel investor.
- You need to add your level of experience. Seeing someone with experience in management team will ease out the investor’s fear quite a bit about the firm’s ability to deal with rough economic situation.
- Avoid being a fad follower. Did you work on your business because of your true passion towards it or just because you want some cash? Angles have the power to spot the difference and will not pay much attention to those firms with easy rich schemes.
These are few of the many ways you can get some financial help for your new business. Whether it is a common industry or something rather unique, these points will help big time.
John Bell has been writing articles on Social Media, skilled business consultant and Financial advisor for the last few years. In this post, he has written about the benefits of Social Media Marketing, Business, Finance as well as the features related to the same.