4 Low-Interest Financing Options for your Business

Finding a way to fund a business is much harder than you’d think. Even if the idea behind your emerging enterprise is bullet-proof, you might struggle to secure affordable financing that doesn’t eat into your earnings.

The happy truth is that there are options that give you the best of both worlds; an injection of capital without the steep costs.

Here are just a few to choose between.

Revenue-based financing

As the name suggests, revenue-based financing is all about giving you access to cash according to projected revenues.

This can be based on either your monthly or annual recurring revenue, and lets you upfront your capital rather than forcing you to wait for it to accumulate over time.

You probably need answers to revenue-based financing questions, so do your research before you commit. But the main advantage to know about is that this is a form of non-dilutive financing. That means you won’t be handing over any ownership or control of your company to an outside investor, but can get the cash you need while staying at the helm yourself.

Funding from your social networks

We’re not talking about trawling social media sites to ask for cash from followers, but rather focusing on social networks in the old-school sense.

The people in your life who you know and trust could provide the capital your company needs to scale up, all without worrying about excessive costs to pay on top.

Just remember that financial support supplied by friends and members of your family is usually only appropriate in the earliest stages of building a business. Further down the line, this may not be as suitable, if only because the figures involved will also scale along with your organization.

Funding through the wisdom of crowds

While once seen as the hot new trend, crowdfunding has become a fundamental part of how emerging businesses and brands get a combination of capital and marketing momentum early on.

There are lots of crowdfunding platforms to choose between, and you also need to decide on how to run your campaign to generate the most impact.

Also remember that this is an opportunity to test out your products and see whether there’s demand for them, or indeed what features and functions are most appealing to prospective customers.

While crowdfunding is not guaranteed to succeed as a way to finance growth in your business, it’s certainly worth exploring if you are unwilling or unable to take traditional routes.

Getting ahead with grants

Public funding for certain business projects can be acquired, so long as you meet the criteria. This could mean getting a particular amount paid directly to your company, or having your tax bill slashed as a different way of incentivizing innovation.

The caveat is of course that not every entrepreneurial scheme will fall under the remit of government grants, as these tend to focus on things like particular branches of research that are deemed to be for the public good.

The upside is that there’s nothing to repay if you’re approved for a grant, which is entirely enticing for organizations that are operating on razor-thin margins and do not want to get tangled up in a financing deal that leaves them even more at risk.

The last word on financing your business

Regardless of which approach to acquiring capital to stimulate business growth you adopt, it’s a decision you have to take after careful consideration of all the options. Think about your long-term goals, not just the short-term benefits, before going one way or the other.

 

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