Borrowing money for business
In today’s world, starting up a new business and make it successful is a big challenge. The people who have financial savings can invest in to business. The important aspect for business is funding. The people who do not have enough finance have to look for an alternative source.
People who are in urgent need of money to set up a new business or expand the existing one can borrow money from lenders. Few common ways will help you to know how you can borrow money for your business to run it smoothly.
- Credit card lenders: If you have a good credit card score history, then you can easily apply for loan for your business. Financing through credit card depends upon your capacity to earn and repay the loan amount. If you get late in paying the utility bills, then it can negatively affect your credit card rate that will affect your business and financial status also.
- Factoring: It is the process where lender will give advance up to 75 -80 percent of the total amount. The rest amount is given based on your repaying ability. A benefit of factoring is that you will get instant cash accessibility. If your business is growing, then you will have an advantage of getting more amount to improve your business.
- Hedge fund lenders: According to some magazines hedge fund lenders are new corporate ATM because these give money to that business that is of high risk like technology-concept backed companies. Benefit of getting hedge fund loans is that, even you have instant cash accessibility, but it has a disadvantage that is taking a large amount and paying penalties until you repay the loan amount.
- Peer to peer lenders :-Peer-to-peer lenders are those lenders who are interested in your success like your family or friends. This comes with a huge advantage where there is quick money accessibility.Placing lending needs online is the one of the simple way. You just have to put your order online many lenders will bid on your loan that you have requested with affordable interest rate. You can choose which suits you and you can easily repay the loan amount.
- Convertible debt instruments: In it, your lender will ask for to consider him as a business partner by converting his loan into a stock. The lender can take the money back if he feels that the business is not growing. This loan is beneficial for the borrower because he will not have to pay back the loan or have to pay a penalty if the lender wants to convert the loan in stock.
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