Types Of Business Finance

Types Of Business Finance

Types of business finance — In a world currently battling with a pandemic, this useful article is geared towards helping small businesses to thrive and throw light on the various opportunities for getting finance for business. Looking for ways to get business finance? Then you are on the right Finance and Business blog.

Here are the six(6) types of business finance every entrepreneur or business owner should know about:

Cash flow lending: Cash flow loans are loans to help an entrepreneur or business owner maximize business opportunities.

Invoice finance: Invoice finance helps small businesses maintain cash flow while waiting for customers to pay. There are two types of invoice financing:

  1. Invoice factoring: Where you sell your invoices to a third party at a reduced cost in exchange for instant payment. 
  2. Invoice finance: Where you use an invoice you have issued as security to get a loan. 

Crowdfunding: Crowdfunding is the use of small amounts of capital from a large number of individuals to finance a new business venture. Crowdfunding makes use of the easy accessibility of vast networks of people through social media and crowdfunding websites.

Angel investors: Angel investors are individuals who fund business or businesses start-up, usually in exchange for convertible debt or ownership equity. Angel investors usually give support to start-ups at the initial stages when most investors are not prepared to back them.

Venture capitalists: Venture capitalists are investment companies that fund startups, early-stage, and emerging companies that have been deemed to have high growth potential in the near future. Venture capitalists step in when they see that a particular start-up has demonstrated high growth.

Small business loans: This refers to the means by which an aspiring or current business owner obtains money to start a new small business, purchase an existing small business, or bring money into an existing small business to finance current or future business activities. Small business loans mostly offer flexible payment plans.

Conclusion: With the above types of business finance, it shouldn’t be a herculean task to choose the one that suits your business.

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