Broadly speaking there are main six ways available to finance your business.
Supplier credit
It is the simplest way to obtained fund for business. Companies buy goods and services and have anywhere from seven days till 6 months to pay for them; when companies need more credit from suppliers the financial controllers will negotiate with suppliers for longer credit terms.
Lease financing
Instead of purchasing the equipment, one can choose to lease equipment - this is a form of financing. Cars, computers and heavy equipment can be financed for a period of time. And then have the option to either return it or buy it at a reduced price.
Bank Loan
Many banks provide loans with fixed or variable rate of interest. It is based on size of business and the growth opportunity of that particular industry in which one is going to invest.
Bank overdraft
A bank overdraft may be a good source of short-term finance to help a business. Banks provide a credit limit according the amount available in one’s account. The main advantage of overdraft is that the interest is calculated on daily basis.
Stock Issues
Issuing stock of your company is great source of arranging finance. It represents an ownership in the business and in all of its assets.
Equity shares, preferential shares and debentures can be floated in the market to arrange huge funds.
Factoring
Factoring is a process which immediately allows the company to receive money based on the value of its outstanding invoices as well as to receive payment of future invoices more quickly.
Factoring companies generally pays up to eighty percent of amount of the bill.
All such techniques are to be used in accordance with the nature of the business and prevalent market conditions.
