Business finance for your company is not limited to bank loans or government funding. Application and approval processes usually undergo long delays and lenders expect applicants to provide good credit and collateral. Even if all this are in line, small businesses aren’t necessarily granted loans. Banks aren’t generally open to risks, many of them having dealt with a number of small business owners who’ve neglected to repay their loans in the past.
To help small business owners secure financing, several non-profit organisations and commercial businesses offer smaller loans at higher interest rates to businesses that have a hard time raising collateral. For those who can come up with some form of collateral, governmental organisations will guarantee a portion of the business’ bank loan (but not lend directly to the business) as long as the entrepreneur provides capital for the remaining portion.
An angel investor is a high net worth individual who provides financial backup for entrepreneurs, in exchange for ownership equity in the company. Venture capital funds are investment funds that manage the money of investors who seek private equity stakes in small and medium enterprises with strong growth potential.
Angel investors step in at the beginning phase of business development, often providing seed capital for the business to operate and grow. Venture capitalists are more likely to invest money once the business is established, providing greater monetary amounts in return for shares in the business, and sometimes a role in the company, usually at the board level. After a period of three to seven years, venture capitalists usually sell their shares, either to the original owner or another investor. Angel investors and venture capitalists normally expect a return of 10 to 30 percent on their investment.
Contact us for assistance with obtaining business finance for your company to thrive.