The three categories of business loans available to business owners are :
- Debt financing: Business loans, lines of credit, non-recourse loan etc.
- Alternative financing: Crowdfunding, Peer to Peer funding
- Equity financing: Working with venture capital firms, angel investors
Business Funding Through Debt financing
Debt financing is a way to fund your business by borrowing money.
Funder(s) provide your business with a loan, and you pay them back loan principal with interest over time. This funding in the form of commercial loans, bank credit lines which are usually a recourse loan. The funder could be a bank, an alternative funder.
But, some project or business owners prefer business funding through SBLC monezation. The unique advantage it the loan is non-recourse in nature, that does not need to pay back the principal.
In summary, debt financing is accessible with faster decision approval process. It is popular because it doesn’t need you give up ownership in your company.
Business Funding Through Creative, Alternative Financing
A new way of funding business is to use online platform or business connection for crowd funding.
For start up companies can consider financing through angel investors, venture capitalists or crowd-sourced funding.
Angel investors
Angel Investors come with capital to invest in exchange for shares in your business. They often also provide advice to business.
Angel investors usually come into your business at an early stage. They help the business get off the ground or take the next step after you have launched.
They are usually successful people, who can see the opportunities within your business. They could be experts in the industry or people passionate about what you’re trying to achieve.
Venture capitalists
Venture capitalists are professional investors who invest in well managed fast-growing businesses.
They are hard-core investors who want to involve in the business. They may join the board and will want some authority and power on the company direction.
They want to take your business become a public listed so they can make a huge return on their investment.
Venture capitalists (VCs) come in at a later stage – once your business is ready to scale up and ready to take off.
Crowd sourcing
Websites like Kickstarter, Bnk to the future are online crowd sourcing platform. Project owners can garner capital and support before producing a product or service.
This fund-raising model use the concept of law of large number of people to invest a small amount of capital. From the capital, which may be enough to ‘kickstart’ a venture.
Business Funding Through Equity Financing
Equity financing investors finance your business in exchange of ownership, in your operations. The investors may be angel investors, venture capitalists, or even friends.
The biggest advantage to equity financing is you don’t have to worry paying back the money you receive.
But, the downside is you will need to prepare to give up ownership in your business. This means a third-party will have say in your business decisions.
Opulent Capital International Group has the connections and expertise. We can source, place and recommend a suitable funding structure for your company.
