To start a business and make it profitable, financing is vital. You can choose from a wide range of long and short term sources of finance for your new business. The first thing to do is to calculate the amount of money you need and when you will need them. This will help you choose wisely from the various sources of financing business in Nigeria and other parts of Africa.
The two major sources of financing are equity and debt. Government grants may also be another source of finance.
Small Business Financing Sources: Different Sources of Business Finance
It does not matter if your business is old, small, new or large, nothing can take the place that major sources of finance for that business. It helps your company to expand, grow, and make use of new organization strategies. "Business finance" is all about money for your business. It is an essential foundation for businesses to survive and flourish. For an entrepreneur, it is vital to know the different sources of deficit financing so you can choose the best for your business.
Commercial Bank Loans
Getting a business loan from a commercial bank is a very good way of financing your business. Youfist apply for the loan by composing a loan proposal, if you company is approved, the bank will determine the details of the loan. It is best to get a fixed interest rate, so as not to pay more than you have bargained for.
Corporate Credit Cards
A corporate credit card is also a source of financing. As a business expands, and its expenses grow, a corporate credit card is sure to provide you with more money. You should note that for larger businesses, credit cards may not be enough. Also, the interest rate is as high as 20%, so it is not advisable unless you want to pay the debt off within a short period of time.
Making use of your personal funds is one of reliable sources of finance for a new small scale business. You can make this possible when you use your savings for business expenses, use retirement funds, or borrow money from family and friends. It is true that most new businesses are financed personally. The merit is that you have control over the options for repayment. Paying a relative back is flexible, and can be negotiated, whereas when you get loans from financial institutions, it cannot be negotiated again, but you must stick to its repayment terms.
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