Every Business at some point in time whether early stage or even at the established stage you required financing. Have you ever applied for funding? Were you successful? How did you determine which type of finance was right for your business and more importantly, did you know your chances of success? Five years ago it was easy getting funded but in today’s competitive market it became more challenging.When you decide on approaching a financier, you should consider few things. according to Gov.uk the best financier for your business depends on:How much money you need? – the greater the amount, the harder it will be.Are you generating revenue or you are still in the idea stage? Needless to say higher revenue thus easier to pay back.Are you able to put a collateral? If a collateral exist then it’s easier getting fundedDo you own another business property? you do then its a lot easierAre you willing to sell shares? If you are willing, then it can get a lot easierAfter considering the above, here are the different types of funding:Investment finance: Selling off equity in return you will be getting the money.
Advantage: your new partner will bring in his experience and knowledge into your businessDisadvantage: You have a new partner in your business which you have to share ideas with and consult with before taking the decision, I am sure you started thinking about the consequences after the number of partners increases. Its similar to a marriage imagine the number of wives increases to 3 or 4.2. Crowdfunding: Getting funding from the crowd.
You post your idea on a crowdfunding platform with an objective of reaching X amount of money over a period of 1 month.if you secured the funding you get paid.Usually, it works at the very early stage where you are still at the idea stage or for projects.Advantage: Another method for getting funding, raising awareness of your product and more importantly validating your idea.Disadvantage: you are posting your idea online anyone can copy it if you didn’t trademark your idea. You don’t get any penny if you didn’t reach the budget.3.
Loans: Traditional way of getting money from a bank, friend, commercial mortgage entity…
You return the capital plus interest rate.Advantage: you are not losing equity Disadvantage: Paying a premium and not very flexible4. Grants: Getting free money when you are working for a cause or solving