Sources of funds are one factor that is very supportive of both to build a business / business or business that has been running. Besides that, funding sources are one of the factors that indicate whether you are ready to enter the business world or not.
Funding For Small Business
The following will be discussed briefly about sources of funds that can provide capital for a business.
1. Personal Funds
Derived from personal savings or deposits, selling valuables and so on. The advantages of this fund are the cheapest funds because they are not subject to interest charges. The drawback is a limited amount.
2. Funds from the mortgage system
Can be obtained by pawning goods or securities to formal or non-formal institutions, for example a pawnshop. The procedure to get this fund is relatively simple, the limitations are in the amount that is usually limited and also the loan period is relatively short.
3. Loans to non-formal institutions
Funds are obtained from loans from family gathering or friendship groups or borrow from loan sharks. The method is simple, but the loan period is also relatively short.
4. Partnering / partnering
Get funding by inviting investors to capitalize on business, or funding from partnership development partners. Funds can also be obtained through venture capital businesses. Such funds are cheap because there is no interest expense and the possibility of a company growing faster is very large. The drawback is that the process of getting it is so long that it cannot be relied on for urgent funding needs.
Get funds from companies or institutions that have entrepreneurial development programs. This type of fund is very cheap but the competition to get it is very tight.
6. Loans to non-bank institutions
This type of loan includes loans to savings and loan comparisons, loans to finance and leasing institutions. The procedure is relatively easier compared to banking institutions. The loan value can also be negotiated as well as the term of the loan. The drawback is sometimes the higher interest rates offered.
7. Loans to banks
Funds are obtained by borrowing directly from the bank. The biggest obstacle is the procedures and requirements that must be met by the credit applicant. This loan is relatively safe because the agreement is clear and there is also supervision from the bank. The loan amount is relatively large when compared to other funding sources.
8. Capital market
Issued debt securities and offered to the public through the capital market. For very large funding needs, this loan can be one of the right choices. However, many conditions and procedures must be fulfilled before the applicant is eligible to issue debt securities to the public. In addition, the company must display financial statements for each period..
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