A business may begin with a dream, but it needs more than that to come to fruition. There must be a plan, a team, and proper funding.
If you have the first two down, all you need now is to find a source of funding to bring your business to life. There are many routes you can take on this endeavour, some of which you will find below.
What Are the Different Funding Options for New Businesses?
If you need a few thousand dollars to help get your business off the ground, you should consider contacting your local bank manager. Most banks give business loans to small businesses, and some of the bigger ones may provide loans to larger businesses.
More established businesses will naturally get much better deals than the smaller companies. After all, the risk is greater for the bank. This is one reason you should research with multiple banks for better chances of getting a loan approval.
Bank Loan Alternatives
As the saying goes, you shouldn't put your eggs into one basket. If possible, look at bank loan alternatives while waiting for an answer from your local banks.
Nowadays, many bank loan alternatives are available. Below are some you need to keep in mind:
1. Angel Investors
Angel investors are individuals who offer funding in exchange for a share in the business. This is a pretty common form of investment in many parts of the world, including Australia.
The primary benefit of this route is that the investor puts up the funding you need while letting you keep the majority of your business. There is also more freedom regarding the investment structure.
2. Private Equity
Private equity is another bank loan alternative that allows you to get the funds you need. However, the terms can vary depending on the investor. If you have a good relationship with the investor, the terms might be more agreeable.
The good thing here is that you will get the capital you need in exchange for a smaller equity stake. However, the investor can also ask for additional control, so read the terms carefully.
If you need cash and a more considerable sum than what bank loans offer, you can consider crowdfunding. Rather than deal with individual investors and give them a share in your business, crowdfunding involves using online platforms to raise enough funds to run your business.
The best part is that you can ask for small amounts—as little as $10 per person—and if you get enough people to contribute, you can have much larger funding than bank loans. The best part is that you may not even have to give away a small percentage of your company's ownership, depending on the situation.
4. Commercial Mortgage
If your business requires a headquarters, you may want to consider working with mortgage lenders to acquire a commercial mortgage. Commercial mortgages are not limited to real estate. It also covers business equipment, so you can use the funds for any purpose you have.
The great thing about commercial mortgages is that you will have a lower interest rate than bank loans and the fact that the repayment period is often longer. This is an excellent way to acquire funds without losing much of your business.
All these options can be viable business funding solutions depending on your situation. Hopefully, these suggestions can help you decide on the funding method that will work best for your business.
When it comes to trustworthy mortgage lenders in Sydney, Wealthy You is one of the better choices. We regularly work with small businesses to help them get the funding they need. Our team strives to ensure all our borrowers are treated fairly and not only as a number.
If you need more information, please get in touch with us today.