A successful business is every entrepreneurs dream, but it is one which is seldom a reality. The majority of start-ups will need at least a few months to build up capital and become cash flow positive, meaning that many small to medium sized companies must look for alternative sources of funding to sustain their business.
Your First Option: Revenue Funding
Revenue funding is the best option for many companies who are not yet making a profit. In this funding model, an investor will provide an entrepreneur cash payments up-front in exchange for some of your revenue over a certain period of time (often once a month, once a quarter or annually).
This way of funding is beneficial because small businesses are able to fund their business without having to pay interest and fall into debt. When you do start making a profit, you can then end your relationship with the investor, depending on your agreement.
Consider Vendor Financing
Another option which may be available to some businesses is vendor financing. Through this funding model, a company that sells you a product or a service then also acts as a lender.
For example, let’s say you need exercise equipment for your gym. A lender would then charge you a regular repayment plus interest, something which is substantially less expensive upfront than if you were to purchase the equipment yourself.
Put Up Your Home
Lenders are more willing to give loans out to those who put their homes up as collateral, but entrepreneurs should be careful. No business idea is fail-proof, and if your company does fail you may need to refinance your home or the lender will have the right to sell it.
Take Money Out Of A SMSF
Also known as a self managed superannuation fund, if you or someone you know has a SMSF, you may be able to borrow funds from it to support your burgeoning business.
Choosing The Right Lender For Your Business
Entrepreneurs are passionate about generating brilliant ideas and building businesses. What they are often not as knowledgeable about, however, are money matters such as bookkeeping, taxes, and lenders.
ATP Tax Consultants provide our clients with the tools and advice they need to build a strong company that will thrive in today’s competitive market place. We will help you determine the right lending strategy for your business that will allow it to grow while limiting debt.
To learn more about ATP Tax Consultants and the services we provide, call us today at 1300 829 484 or email an enquiry to our team of professionals here.