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Types Of Financing Options For Businesses

29 May 2019 No Comment

Making the decision to take out finance for your business can be a tricky point to get to. The reasons for the finance will be very different for each company but can include investment in growth, rental of equipment or you may just be going through a tricky time in your company and need a little bit of support.

Finance options sometimes get frowned upon as ultimately this is debt in the company, however, financing short terms issues or investing in a project could lead to growth and overall support your company better in the long term.  Here are some different things to consider in terms of finance options.

Equipment Financing

If you are looking to specifically finance equipment required for your company you may wish to choose using one of the many equipment financing services available from companies like Charter Capital. This sort of company offers something slightly different from conventional lenders that can prove to be advantageous.  They can get lending up to the value of a million and only take a small margin in terms of a referral fee. Generally, they can offer rates that can beat the bigger lenders. In addition to this, you can normally get much longer terms through a company like this (if that is what you are looking for) and a period of over 10 years if required.

Banks

You could always go the conventional route and contact a bank.  If you are already a loyal customer of a bank and have a good history with them, this could prove to be a good option. However, if you are simply going out into the market and contacting different banks then usually, they will want to see evidence of your credit history etc. Depending on the amount of cash you are looking for, they are also likely to ask for some type of project plan showing what the money will be invested in and how it will get back to the company. Negotiating the interest rate with the bank is usually difficult and it is normally pretty standard depending on the amount of money requested and the terms of the loan.

Company Investment

If you are looking for a substantial investment, you may choose to look at investors of different types which could be another company or individual where you give them shares of your company in return. This could prove to be a pretty smart move, however, it needs to be thought out properly where you should make sure that you get a good independent valuation of your company in advance in order to ensure that it reflects the percentages you are considering giving away.

There is also a level of trust required here in terms of who you are working with where if you are giving away a number of shares where they become a decision maker in the company – you want to make sure they are aligned with your strategy and direction.

Make sure to try out some of the ideas that we have discussed in this article.

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