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WHY BUSINESSES SHOULD SEEK FUNDING

Chinedu Obidike
Nov 6, 2020
3 min read

Most healthy businesses need business financing at some point. Startups have to deal with starting costs and ongoing businesses have to finance growth and working capital. Deciding to take on some kind of debt is quite common. Financing options depend on what kind of business you have. Its age, position, performance, market opportunities, team, and so forth are very important. Businesses need finance for a variety of different purposes, but there are some common reasons why businesses apply for funding. Sufficient working capital is a key aspect of any company’s financial health, and not having enough working capital can have a serious impact on the future of your business. Many businesses choose to apply for external funding to create enough working capital to enable them to fulfil their growth ambitions. A loan can cover short-term funding requirements while giving the business the money it needs to grow or can bridge the gap between customer orders and supplier payments to help the company meet its funding obligations. Working capital funding can also allow your company to take advantage of new opportunities that arise, investing in new products or services to enable you to expand. Working capital loans can provide a useful ‘cushion’ for your company should you need a bit of extra cash for your day-to-day running costs are covered with a loan, so you will have the funds available to meet any unexpected costs. Growing your business and increasing sales often requires you to purchase assets such as new machinery or vehicles. While you may have enough cash to cover working capital expenses for your company, you may look for a loan to cover the purchase of new assets to enable your business to expand. An asset funding loan is a great way to spread the costs of acquiring an expensive new asset. Fixed monthly repayments and loan terms from 6 months to 5 years can help you plan your cash flow in advance so you can make the most of your opportunity to grow. New businesses that are still in the startup stage will need funding to get off the ground, and good cash flow is essential to a small business. While most directors will use their own funds to start the business, very few manage to entirely self-fund the company to profitability, and will therefore have to seek external funding. There are a variety of options for external startup funding, including bank loans, borrowing from family and friends, equity investment from a business angel, crowdfunding, and funding grants. A loan to start a business can be used for everything from buying stock to marketing to hiring staff, but startup funding can be difficult to secure and many traditional finance providers will require lots of information, such as a detailed business plan. If you are looking to grow your business to take it to the next level, you may very well need funding that enables you to execute your business plans. Whether you want to increase sales, expand your range of products or services, move into new premises, hire more staff, or expand internationally, a loan for growth finance can help.

However, you are planning to expand your business, growth finance that is right for your company can help you take advantage of new opportunities and make your ambitions a reality. If your business has its daily running costs covered, external funding may be the solution you need to grow. Many such loans will have fixed monthly repayments over the term of the loan, enabling you to more easily plan your business finances as you grow.