There are numerous sources of finance apart from your own contributions. So, from where will you obtain finance.
RECIPE FOR SUCCESS INGREDIENT CARD
Ingredient 3: Cook the Books
Question:
How to obtain finance?
Answer:
Every new business needs to consider a realistic amount of finance they need in order to get started and from where the money will come.
Private finance
This could come from family or friends. Always have any transaction formalised by a written statement.
Banks
Banks will provide overdraft facilities and term loans to small business operators subject to suitable security. The owner would be expected to make regular payments over a period of time.
Business loans
Business loans have only recently been introduced into the product range of some financial institutions. They have been designed specially to stimulate business growth and investment in the economy. They are usually available at a special interest rate. Fees vary from bank to bank. It pays to shop around.
Finance companies
Lease finance is often obtained through these organisations:
- Credit unions and building societies
- These institutions are similar to savings/trading banks, but usually, loans are restricted to existing customers.
- Vendor finance
- The seller of the business may assist the buyer to purchase the operation as an incentive.
- Accountants/solicitors
- Often these professional advisers have clients who wish to invest their money privately. The adviser can then use these funds to provide finance to business owners, usually at a higher rate of interest than traditional sources.
- Government sources
- Funds from grants/special loans or subsidies may be available under some government schemes which may encourage export, research and development or employment.
Every new business needs to consider a realistic amount of finance they need in order to get started and where the money will come from.
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