20 May 2021 Smart Tips To Raise Capital For Your Small Business

Smart Tips To Raise Capital For Your Small Business

Businesspersons might face dozens of challenges in their entrepreneurship life. The biggest one is finding sources to raise capital for their new startup. They need money at every single step, from renting an office or factory to buying raw material for their production and hiring professional staff for operations.

Capital is a basic need for every business. You might have hundreds of business ideas, but without capital, they are worthless. Even a successfully running business sometimes requires micro-business loans for growth or new asset purchase to run the business smoothly. When starting a new company, the second action that all investors and entrepreneurs must focus on is deciding on selecting startup capital.

In Singapore, not all capital-raising options are suitable for all founders and entrepreneurs. Exploring more than one choice can help a business person diversify their risks and improve their chances of obtaining the micro business loan Singapore.

Best Capital Raising Options For a Business In Singapore:

Which capital-raising options are best suited to a startup company’s needs? It’s entirely up to the owner to make the decision. Let’s take a look at some of the best options:

Seeks Help Or Be Partner With Family And friends:

The easiest way in such a situation is to ask a family member, relatives, or friends to help in the startup of a new venture or become a partner in the business. The level of trust will be high, and the person may succeed in getting desired micro business loan, Singapore from their surroundings. But be sure to document everything to avoid conflicts in the future. It must be in a legal format and clearly state the right and responsibilities of investors.

Angel Investors:

Angel investors are private investors, groups of individuals, or small companies with extra money and offer to fund the new starter. Many angel investors require becoming an equity partner in a new business. For all startup businesses risk level is high, so resultantly, angel investors insist on high return because they are the investors in a business, so they are in a strong position to participate in managerial roles and strategic decisions.

Equity Financing:

Equity financing is the most famous and trustworthy process of raising capital where sales of shares transfer the ownership rights with all its risks and rewards. The long-term projects and urgent short terms pressing needs compel companies to raise capital through the issuance of shares. The attractive feature of equity financing is the transfer of ownership and liability. From the investor’s point of view, they become partners and accept liability to the extent of their shares that make it so attractive and trustworthy for investors.

The investor of equity financing may be an entrepreneur, a friend or a family member, a Singapore loan company, or it can be offered to the general public. One can offer shares to the general public thru an initial public offering that private companies go through to sell shares of their company. The term Initial public offering is mostly used for public limited companies for their first-time issuances for share. But in a broader term, it can also apply to small and private companies.

Personal Financing:

Staring a new business is often difficult. Investors, financer’s or loan companies may be reluctant to lend to entrepreneurs because of this degree of risk. This is even more complicated if the founder hasn’t put any of his or her own money into the company. Investing your own money means you, the owner, will do and everything to take their business to the next step. The fear of loss compels them to do hard work.

 

There are many ways to arrange personal finance that could be selling own house, car, or other assets or simply requesting any Singapore loan company for a personal loan. Injection of personal finance will take the company’s level of trust to the next stage, and more and more people will be ready to invest.

Business Loans From Banks Or Lending Institute

A business loan from banks and other lending institutions is available in many forms. The name or terminology used may vary from bank to bank, but the basic purpose may remain. The loan is in many forms. The security and procedures attached to that also different for each micro business loan in Singapore. These forms could be SME loans, Micro Finance, Business loans, etc.

Invoice Factoring/Discounting:

There are lots of investors who offer advance money against undue invoices. In this way, one gets money before the due date to fulfill their urgent needs and payback at the invoice due date and charges.

Vendor Financing:

Vendor financing is a very cheap financing option but not a popular one. All the business probably faces a shortage of finance and struggle to arrange new ones that make it unpopular financing source. Vendor financing may help you in two ways.

  • Firstly if a business person is short of finance and has strong relationships with their vendors, they may ask them for Help, as family or friends Help.
  • In other ways, they can offer them a discount on their products for the advance payments, which makes it attractive.

Venture Capitalists:

Like an angel investor, a venture capitalist also has extra resources to invest in new projects with a potentially high return and growth. In addition to the high growth and monetary return, venture capitalist also requires shares in ownership and powers, in decision making.

The conclusion of all above is that “Nothing is free, and you have to pay for what you get.”

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