Financial Tips Small Businesses

How and When to Get Funding for Your Business

How and When to Get Funding for Your Business

If you’re a well-established company with a good market place, you’ve most likely taken out a business loan in some form. This is because, well, it’s pretty much a given when it comes to turning a startup into a profitable one.

The problem is that going from point A to point B requires a lot of resources. To grow from a single store to a franchise.

It’s not only naive for young companies to try to escape any kind of funding, but it’s almost certainly harmful as well. Because of the nature of Return on Investments (ROI), most companies operate by spending substantial capital and, if they’re lucky, returning just a fraction of that value per year or month.

You’ll be wasting a lot of time if you wait for the company to raise enough revenue to finance these expansion projects. This can mean sitting on a small company for a long time without ever putting it to the test to see if it can succeed.

“If you want to be successful, you need the courage to risk failing. Doing nothing means you’ll avoid failure, but it will also mean you’ll avoid success”

You should not afraid of failing and understands that in order to succeed as a business, you must take some risks. Typically, this implies that you must be able to take on any debt.

What factors should you consider when deciding on a financing option?

You can start a crowdfunding campaign even in the early stages of a company, even at the ideation point. This is a way to collect a small amount of money from a large number of people in exchange for the product you’re trying to sell in its early stages, for example. This is a brilliant way to entice people to part with money in exchange for the opportunity to try out the new product first.

Another choice is to seek out an angel investor. They might be willing to give you a large sum of money if you can persuade them of the viability of your business plan (in great detail, of course). In exchange, they receive some equity in the business, which means you own slightly less of it than before. You can do the same thing with venture capitalists, but they will only be involved in companies that are slightly more mature.

A loan could be a better option for those who have moved past the concept stage of their business and do not want to give up any ownership. A well-established company may typically obtain a business loan from a bank at a fair APR (annual percentage rate)—usually under 7%. Offering your huge assets as collateral for a secured loan will also help you get a low APR. This is good news for businesses that have been around for a while and have a decent credit record.

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Many younger or smaller companies, on the other hand, struggle with creditworthiness and have no hope of securing a bank loan. However, there are several alternative funding options available. Alternative lenders make it much easier to get a small business loan than it is to get one from a bank. They actually need very little paperwork, take very little time to process, and have much lower turnover and trading history requirements.

How and When to Get Funding for Your Business

Also Read: Why Small Business Loan Is so Important?

As a result, your APR would be higher. However, most companies should be able to avoid this with proper cash flow forecasting and preparation. A higher APR suggests that it isn’t ideal for long-term loans; thus, if you think you’ll be gearing your business for years with these, it may be a poor idea, as ROI will never outperform the APR. However, the advantage of these more relaxed lenders is that you can normally make early repayments without penalty.

Also Read: Basic Ways a Term Loan Can Help Your Business Growth

For example, short-term equipment financing can be a great way to expand your company. If you run a printing shop (especially when the technology was still new), you could find yourself completely tapped out with only one printer. Since your single printer is still in service, you can have to place people on waiting lists or drive people away outright. Short-term machinery financing might be a perfect way to buy a few more while working extra hard to pay off those debts in a few months. It might have taken 5 months if you had waited for the gains from only one printer to be reinvested in the new printers. Your company has just doubled in pace as a result of this.

Low-cost bank loans. Alternative funding, on the other hand, will provide quick cash for immediate growth for startups and SMEs.

Alternative financing’s other advantages

Alternative funding is also worth exploring even though the small business is qualifying for a bank loan.

Many business owners are becoming increasingly dissatisfied with the prospect of supplying a bank with endless documents over the course of several weeks or even months while waiting for a decision on an application. This tends to be an unnecessary danger in and of itself. When you should have been focused on revenue-generating operations, you were spending all of your time and resources on predictions, budgets, and plans.

Alternative funding has the advantage of being instant, and cash flow is the leading cause of SMEs failing. As a result, they complement each other. Bank loans can be excellent if you have the luxury of waiting a month or two, but they are simply not feasible for many SMEs. Many of the challenges that low-capital businesses face are immediate, and we need to be aware of our options as they arise.

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Financial Tips For Small Businesses

Financial Tips For Small Businesses

It can be quite difficult to keep up with all of your business finances, but you can stay on top of everything by setting aside some time to breathe and laying everything out. Make the most of accounting or finance tools to track and manage your money. To help you further towards the road of ultimate financial prosperity, here are some business finance hacks you can follow through starting today.

Separate Personal and Business Expenses

When you are fully immersed in your business, there’s a tendency that you’ll mix your business expenses with your personal expenses. This can cause confusion in your accounting records, especially when tax time is just around the corner. You might even dip into your personal savings when your business is losing money.

You can avoid this by making sure that you have a separate account for personal savings and business capital. Open a business checking account and credit card for business expenses. Such a tactic will also help you build your business credit score.

Set aside a good amount of money every month for yourself as well. Paying yourself by making a deposit in your savings account every month will help you grow your personal wealth over time.

Make Projections

You can stay on top of your cash flow by keeping track of finances and continually make projections. From here you can establish a budget and stick to it. Be aware of where your money is going by using tools to keep track of receipts, manage invoices, and stay ahead of accounting.

You’ll be able to anticipate future obstacles and establish realistic financial goals by seeing all of your finances in one place. You may opt to use a spreadsheet or other accounting tools to help you with business finances.

Purchase Adequate Insurance

It is a reality that a lot of startups fail in the first few years. You’ll never know when your personal and business assets will meet disasters, so it’s good to get insurance. Get personal life insurance to safeguard yourself when you lose your income. If you have a family to support, get a life insurance plan in case you won’t be able to provide for them in the future.

savings

Diversify Your Portfolio of Investments

Besides the active income you get from your business, find other ways to increase your wealth through diversified investments. You can tap into passive income streams such as digital products or courses from your expertise, or go for mutual funds to grow your money. There are so many ways to grow your finances besides your business, and you just have to know which are reliable and more in line with what you want to do.

Don’t Forget Your Retirement Savings

Being self-employed entails you to solely care for all your finances. You can’t rely on having another company or employer direct a part of your salary to retirement since you are your own boss with a company to run. It pays to make a commitment to set aside money for your retirement savings every month. You’ll be thankful that you did this earlier once you reach your retirement age.

Create an Emergency Fund

A recommended formula to follow when it comes to beefing up your finances is to:

  1. When money comes, pay yourself first. Set aside money for your savings before anything else.
  2. You can then put money on growing your business capital.
  3. After that, give some amount to grow your investments.
  4. Lastly, don’t forget to deposit money for your emergency funds.

This system will help you create a safety net for whatever life throws at you. You are now putting your eggs in several baskets. In case one thing doesn’t work, or cash flow in one thing is tight, you can tap into other sources of funds.

An emergency fund will tide you over in case you have unexpected expenditures. This can be just about anything, such as hospital fees to pay or needing to buy new equipment for your business.

Grow Your Business Through Financing

It may be difficult at times to catch up to payments or target revenues when cash flow is slow. Here’s where small business financing can help you. Getting a small business loan or line of credit can help you in your short-term and long-term finances. If you need to inject funds to your business, let JNA Financing help you find the right financial solution.

At JNA Financing  we offer:

  • Merchant Cash Advance
  • Business Loans(Daily, weekly, bi-weekly, by-monthly payments available)
  • Lines Credit
  • Inventory Loans (Loans against Inventory)
  • SBA Loans
  • A/R Factoring
  • Equipment Financing
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Remember that financial wealth is not about how much you earn, but how much you keep. You can build up on your finances by lessening unnecessary expenditures, maximizing your profit margin, and growing your investments. Dreams and financial wealth also grow slowly, so you have to be patient in building them up. With daily discipline and wisely managing finances, the turtle wins in the race for prosperity.

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