The Small Business Forum
YOUR SOURCES OF BUSINESS FINANCE
- A business requires funds to finance fixed assets and working capital, or business startup and growth. The main sources include the traditional loans and equity venture capital, angel investors, joint ventures, and microfinance. Equity is own funds. Loan is borrowed finance to be repaid. The other sources mainly cater for those who cannot get financing from conventional banks.
- The different sources suit different types and stages of the businesses. While some are suited for start-ups, others are for growth. Some funding also remains in the business for long, participates in management, and takes profit; others are repayable, charge interest, and require collateral or security. A main problem is funding startups.
- Your chosen source of finance depends on, among others:
- The purpose for which the funds are required.
- The business growth stage.
- The period over which the funds are needed.
- The extent to which you wish to share decision-making and profit.
- The level of risk you are willing to carry.
- Availability of assets to provide securities for any required borrowing.
- The choice also depends on the business legal form, business goals and objectives, and the business expected performance or profitability.
Comments, Questions and Suggestions welcome.
drkibuka@thesmallbusinessforum.co.ke
+254-729524219
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