Anyone who runs a enterprise knows that funds are vital. Even a quick interruption in cash flow can prove an impediment to routine operations. Access to sources of funds is just as crucial if one plans to expand, modernize or launch campaigns to generate more revenues. Smart enterprise will always be on the lookout for sources of funds they can tap into whenever the necessity arises. One can go the common route or one can explore other options.
Common channels of enterprise financing are banks and financial institutions that play by the rules. One must have a proper credit rating, a profitable ongoing business or a enterprise project with a project report, audited financial statements and plenty of different documents in support to get funds at a low rate of interest. Some companies which can be struggling simply discover this to be a tad overwhelming. Then there are non-standard types of enterprise financing that deserve severe consideration.
Finance from friends and family members
One should keep options open when it involves sources of funds for business. It might be the best way to get funds to borrow from friends and relatives. You might or might not pay interest. You may reply at your convenience. You certainly do not need to offer any security. The risk is that if you are not able to repay you stand to lose in your relationship.
Loans in opposition to hypothecation of stocks, towards orders and towards invoices
No businessman ought to overlook these three vital sources of financing for small businesses. Loan towards hypothecation of stocks is a pleasant way to have access to funds even after investing in stocks which will take a while to process into completed goods. Acquiring loans in opposition to orders is another way to remain liquid. One gets an advance of as much as 70% of the order value and is freed from cash constraints. Equally, the hole between raising an bill and receipt of funds could be anywhere from a week to a month and even three months. One can get finance against bills within the brief term, of as much as 70% of the bill worth and the lender “buys” the bill, remitting the remnant part after taking his reduce when the client makes payment.
The above three methods may not be suitable. There are times when a merchant is stuck and the only way to get funds in hand quickly to meet fast necessities is to go the merchant money advance route. Any merchant in operation for 2 or three years with a credit card sale of $10,000 can access funds up to $200,000 just by furnishing proof of identity, proof of ownership of enterprise, proof of residence and bank statement. No collateral is asked for and repayment is tied to card sales as a percentage. The downside is that the factor rate or APR is high however then when one gets MCA from a suitable lender the phrases are reasonable.
A sensible businessman will explore and keep all options open, taking the most effective one when required and forge ahead.
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