Finance is the lifeline of all business. A business firm requires finances to commence its operations and grow the business. Sound plans, efficient production and marketing work well if there is a smooth flow of finance.
For starters a financial plan needs to be prepared, which indicates the requirements of the business, sources for raising the funds and the application of funds. Financial planning for starting a business begins with estimating the total amount of capital required by the firm for the various needs of the business. Here’s how you can go about getting the right finances for your business:
- Establish a Line of Credit
Using a line of credit as working capital can make it easier for you to manage your cash flow as your income or expenses fluctuate. It allows you to borrow only the funds that you need giving you more control over the amount of interest you will accrue.
- Business loans
For larger investments, it may be time for a term loan. Like a mortgage or personal loan, term loans come with fixed interest rates and monthly payments over a period of years. Unlike a line of credit, a business loan will provide you with a large sum of cash up front. These loans can be ideal for expanding your space or funding other large investments.
- Commercial loans
For established businesses that own commercial real estate, a commercial loan is another option. Like a home equity loan, a commercial loan allows you to borrow against the equity you’ve built in your business property. Depending on the value of the property and the equity you hold, this could mean more borrowing power.
- Equipment loans
If you’re specifically looking for cash to fund the purchase of new equipment – including vehicles, manufacturing or production machinery, farming equipment, or other necessary equipment – then an equipment loan or leasing program may be what you need. Like business loans, equipment loans offer fixed interest rates and payment plans over a period of time.
if you have just started your business run it on a tight budget. It is always advisable to be bootstrapped that funded during the initial days, financial help is something a business owner must consider in the growth phase of the business.