Business Finance
There are many more ways to get money
Keep in mind that if you are out of cash then you will be out of business.
People are really desperate about getting money. Most of them end up paying very high interest to local money lenders and loose their mortgaged properties. Many pay high percentage as bribes.
Just follow these steps to get finance quickly, save interest costs and eliminate bribery. Hire a professional to assist you in every step in arranging money in minimum cost and hassles.
1. Prepare A Business Plan
You don't need money. Your business needs it. So, you must clearly document what your business is all about, purpose for which money is required, how much profits will be generated in future and what are possible risk factors alongwith risk management strategy.
This will help you understand your own business better, save costs, increase sales and find right means & sources of finance.
2. Finalise Mode of Finance
Money is more than cash currency coins or notes. Money now comes with different forms, speed and costs.
Ordinary Loan
Term Loan, working capital finance, bill discounting, inter-corporate loan, etc. There are many more modes of debt finance (like debentures, bonds, fixed deposits, commercial paper, etc) available only to large corporate entities. Enterprise needs to pay interest even in case of loss.
Preference Shares
This is just like fixed term loan but fixed dividend (like interest) or repayment is payable only when there are sufficient profits. Only registered companies (Like Public Limited, Private Limited, etc.) can issue shares to investors.
Equity Shares
Investor shares profits of enterprise in percentage of their holding in company. Theoretically, in case of loss no payment is required to be made. Only registered companies (Like Public Limited, Private Limited, etc.) can issue shares to investors.
Channel Finance
Advances, credit and security deposits from channel partners. These are subject to terms and conditions as per agreement between transacting parties.
3. Understand Requirements of Funding Agencies
You can approach different agencies for finance as per your business needs, prospects, eligibility and many other factors.
Family & Friends
Sounds easiest. Yes, it is. Traditionally, near and dear ones have been first people who financed almost all business ventures across the world. They do not charge any interest or share in profits. However, times have changed. People are increasingly becoming money minded due to their own personal financial commitments.
Banks & Government Agencies
There are many schemes under which you can get funds without collateral security. Yes, new enterprises also get bank finance. Anyone can approach a bank with detailed business plan and as per eligibility the can get funds upto 50 to 80 percent of project cost. Tough to convince but this comes at the lowest interest rates.
Organised Financial Intermediaries
There are registered non-banking finance companies, inter-corporate finance, cooperative societies, venture capitalists, high net-worth individuals, family trusts and many more entities. This is somewhat easy for enterprises having goos track record. This comes at very high cost.
Supply Chain Partners
Business customers, retailer, franchisees, suppliers and many other players in entire supply chain finance different activities and cover costs. Lead player often arranges tie-ups with banks and finance companies.
4. Improve Your Credit Rating
Anyone who will finance you will ask for many things to make sure that his investment is safe and there will be timely repayment.
You have to convince that you are genuinely doing business and will be profitable in future. Some of the things any rating agency seeks are as under:-
Clarity of Business Model & Business Plan
Promoter's Education & Experience
Registrations & Legal Compliances
Accounting & Management System
Track Record in Terms of Sales & Profits
Status of Existing Loan & Financial Commitments
Risk Management Process
Management Team & Key Persons
Competitive Advantage in Market
Registered Business Premises (Owned/Leased)
Other Relevant Industry Specific Factors
5. Prepare Necessary Documents
Documents are proof of your business. No documents mean business is non-existent. As per requirements of each funding agency you need to submit lot of document including following:
Detailed project report
Application form (as per bank/funding agency)
ID & address proofs of promoters/directors/partners
Legal registration of business enterprise
MOA/AOA/Partnership Deed
Balance sheets, profit & loss accounts and tax returns
Bank statements of company and promoters/directors/partners
Asset liability statement of promoters/directors/partners
Quotations for plant & machinery, equipements and significant costs items
Title/lease deed of business premises
Clearance from governmental, statutory, municipal authorities etc.
Company brochures and marketing materials
Sales orders, if any
6. Draft Answers to FAQs
You will be asked a lot of questions. Almost all people will ask same questions in different tones or language.
Some may sound awkward or very unconfortable. A lot of negative energy will be around when you discuss your financial needs. Many funding agencies will try to reject your proposal or even kill your motivation to do business. It is normal
The best way to stay positive is to prepare answers to all frequently asked questions in writing so that you speak in one language with everybody. This will also speed-up your disbursement of finance.
7. Application to Funding Agency
Apply in proper format mandated by funding agency. Try to submit proposal with a covering letter summarising the things.
As per procedure you will called few times. Later on your employees or authorised persons can represent on your behalf.
Representatives of funding agency will verify your business premises and also your residential address.
8. Understand Terms & Conditions
As soon as your proposal is accepted, you need to sign lot of agreements and submit additional documents.
Read things multiple times. Take finance only when you are ready to comply with all terms and conditions. Easy money often comes with difficult conditions.
9. Do Compliance & Keep Good Standing
Your business growth and future of your next generations depend upon your conduct after disbursement of finance. Use the money only for business purposes. Submit required performance documents on time.
In unfortunate event of non-compliance inform the funding agency in advance, discuss your problems and seek additional funding or restructuring on time.
Initially you may be given lesser amount but you can certainly get a bigger amount as per your track record.