It is always challenging for small businesses to raise money to start or to operate business activities smoothly. This is true for established business as well when one has to sell off its inventories at low prices to raise money or to look for other options. Sometimes there is slowdown in market and all your payments from clients hang in between or take much time which creates a state of crisis. It is also an opportunity to start a new business in recession because the interest rates are low but again there is a risk of business from market.
There are various funding sources of money to startup or operate a business. According to Money For All these methods are as follows.
Self–Financing: – It can be done by personal resources.
Loans: – It can be Bank loans, credit card loans, people to people lending or from professional loan lenders. Bank loans can give loans on some assets of yours. Small Business administration runs program that help to new and small businesses to secure loans on low interest rates.
Taking debt from credit card is a poor option for any business. However cash advance credit schemes by some banks can be small term loan option in which interest is low than normal credit card loan. Personal to personal loaning is practiced from long and always a good option but for that you must explain them your business plan and earnings so that they can invest money in your business.
Investment capital and grants: - There are some governmental schemes in which govt. promotes small scale and new business .In these schemes a loan is given by govt. with subsidy on it. E.g. you get a loan of 5 million dollars and you get a subsidy of 1 million dollar i.e. you have to pay only 4 million dollars. To get approval to such loans your project must be a feasible one and profitable.
The most elastic source of funding for any existing business is bank loans which you can take any time and pay according to available resources however if your business plan is good you can go to avail government grants which offer very low interest rates and subsidy as well.