Investing to expand your business has its own risks, opportunities, and obstacles. Small businesses are concerned about accumulating adequate working capital for smooth business operations. For every business, its initial phase is crucial, and for it to keep going and acquire momentum, quick business funding is necessary. The interest rate of such loans depends upon different factors such as the kind of lending authority, business type, market trends, credit rating, and loan amount your business requires.

Check out crucial business working capital loans, and you must consider availing yourself of your business.

Angel investing

Angel investors are influencers who look to invest in a company that they consider has the potential to become profitable in the upcoming times. However, consider equipping yourself with an intensive business plan before approaching an angel investor.

Working capital loan

Small businesses take up such loans to mitigate the short-term requirements of liquid cash. When there is a cash shortage for regular operations, working capital loans can be highly resourceful. Business financing is granted for up to 7 years of repayment tenure for processing charges of up to 3 percent of the loan amount and an interest rate based on the credit risk examination of the business.

Invoice and equipment loan

An invoice loan is generally considered a means for raising capital based on the time difference between raising invoices and receiving customer payments. Invoice loans assist businesses in easing cash flow, reinvesting in operations, and paying suppliers and employees much earlier than they could have if they had waited for the customers to make the payment in full.

An equipment loan is mainly for businesses in the manufacturing sector. Banks provide specialized small business loans for buying costly and essential equipment, which can be as high as Rs 25 crore. However, a few banks also provide up to Rs 100 crore. The duration of such loans goes up to 4-5 years with a lower rate of interest, wherein equipment is considered security and other additional collateral.

Crowdfunding and cloud funding

Crowdfunding refers to a group of small companies that help business ideas reach out to prospective investors via distinct platforms. Such investments can be based on either equity or debt. Few crowdfunding sites also provide rewards in exchange for assets. Crowdfunding gives businesses the opportunity to reach out to various investors instead of seeking just one prominent investor.

Cloud funding is a method of financing your business via the Internet through various investor groups that allow you to pitch your business ideas.  

Venture capital and partners

Strategic business partners can be a good source for raising capital because they align their resources to help your business. Such partners also have the choice to become company employees. On the contrary, venture capital is firms that cater to small business financing for initial business stages. However, they seek comparatively higher investments and hold a controlling role in your company. Such firms generally invest against equities and make exits whenever an acquisition occurs. They also provide mentoring services and examine the company for sustainability.

Ending note

Whether it is a startup, a seasoned business, or a serial entrepreneur, each venture needs funds in the form of working capital at the beginning and during the operational stages. Though many companies are bootstrapped, to start with, there is a continuous requirement for funds to mitigate the venture needs. The above five ways can help you raise adequate working capital for your business.