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How to Finance a Small Business Quickly

(@Anonymous)
New Member

There are many ways to finance a small business quickly. Depending on individual circumstances funding ranging from grants, personal loans, bank loans and venture capital can be obtained. You need to get prepared when shopping for funding because without a very elaborate plan, getting funding can be an uphill task.

Bank loans are suitable for those who have already established their businesses and are already running. Commercial banks can request that you supply them with your operating accounts for some months or even years to enable them evaluate the profitability of your business hence make decision to lend you or not. However, you will have to write a business loan proposal that outlines your need for funding together with the current and projected future information on cash inflows.

Microfinance institutions also offer business loans for individuals and groups. While their application requirements are not very strict, you must demonstrate real need for financing a sustainable and profitable business venture. However, they prefer to lend to groups since each member of the group guarantees another hence reducing the lending risk. Some microfinance institutions target a specific segment of clientele hence you will need to gather information if you qualify to get financing from these institutions.

Venture capital is also an easy way to finance a small business. The proprietor of the business parts with a certain agreed equity of the business and in return the allotees of the equity finances the business to the agreed amount, then the profit of the business is shared between the financier and the proprietor.

Some governmental and non governmental organizations can offer grants to enable people finance their small businesses. The amount is limited but can be of a great help especially when there is a need to put the business running. This way of financing is really good since it cannot be repaid back, unlike loan which requires you to pay back together with interest.However,you will be required to account for the use of the cash advanced to you to ascertain whether you used for the right purpose or not.

Personal savings can be of great help in funding a small business. Bearing in mind that the amount invested will not be paid back and remain part of the business capital, much relief also exist because payment of interest on such capital is at the discretion of the proprietor.

Loans from friends and relatives can also be a quick way of financing a small business. Since this does not require many formalities, an individual can just request for cash from his or her friends and relatives. This can be granted within the shortest time possible.

If the business is trading, you can request for trade credit from your supplies. This is an arrangement that can enable you obtain stock on credit and sell then repay your suppliers at a later date. This is a very convenient way of small business financing and in addition to using the credit facility; you can also enjoy cash and quantity discounts.

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Topic starter Posted : 31/03/2010 5:55 am
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