Getting finance to start business

3 October, 2012

There are many things to take into consideration when planning a new small business. This is important because if you plan your organization well you will have a fair idea of the cash flow and how much investment you will need to start your business. Most companies have successfully established their business on as little as $ 1000. However, even if you need a lot more cash, there are sources you could consider tapping to bootstrap your business.

Things to consider before budgeting

You must have a clear idea where you will be spending your money. To get an idea of how much you need you must know where you will be operating from, home, mobile van, or a shop or office. A good decision viz a viz the location of your business can save you a lot on overheads. You need to know if you will have employees and how many. Where you will source the raw material from, how much you will spend on transportation or logistics, and what machinery, if any, you will need. Finally you need to know how much recurring expenses you will have to meet each month among other things.

Once you have a good idea of the amount you need to invest, you should try to come up with as much money by yourself before borrowing. Tap all your investments, bank accounts and even home equity.

Home equity as a source of funds

You can get as much as 80 percent of the amount of your home equity to fund your business. Home equity loans are secured loans and are a great and fast source of cash. Approach your bank and secure a home equity loan to finance your business. But do this only if you are 100 percent sue you can repay the loan.

Loans against investments

If you have any investments such as company shares or bonds you could put them up as collateral for a loan to tide you over for the time being. Or, if you feel that the shares have reached their peak value you could sell them and utilise the cash in your business and earn greater profits.

Business loan

Banks approve loans for business at comparatively reasonable interest rates so approaching your bank for a small business loan would be a viable option. You will need a great looking, feasible project report if you are a start-up, or a balance sheet that will attract a banker if your business is already running. You will have to be convincing and have all statistics on your finger tips when negotiating for the loan. Most Australian banks are easy to deal with if you have a good credit rating and a promising project plan, but if you are not confident in yourself, ask an accountant to work with you to secure an Australian small business loan.

If the amount required is small

You could tap your friends and relatives by either asking them to lend you a small loan or to invest in your business for returns that they will not get from any bank. But when convincing them, be sure you are truthful and clear about the returns and the risks involved with the business.

These are some of the fastest ways you can finance a small business venture at very low rates of interest.

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