Quick financing of business can be very easy if the tricks of the trade are known. The options are unlimited with personal funding, grant, loan, mortgage etc. being some of the most commonly used methods. Surprisingly, the most important trick of the whole concept is not a trick! It’s a responsibility that has to be adorned by the owner of the enterprise and deals with knowing the demands of the firm which would mean having a well-drafted plan for everyone to refer to while looking for a loan. It this step is not carried out in the best possible manner, even the best of the loans available in the market would skip the eyes of the businessman.
Bank loans require having collateral. An underdeveloped firm would not be in a position to provide the bank with the same which is why; they are not the right people to go for a loan to. Banks would require the applicant to complete a lot of formalities and at the same time provide them with a complete list of accounts under operation. By looking at them, they can then view the profits of the firm and evaluate whether giving them a loan would be a good option or not. This is not all; there is also a need to submit a detailed report on how you plan to invest the money.
There are other institutions (smaller than the banks) which offer loans. Because of their smaller nature, the amounts of loans provided by them are smaller but they compensate for that with policies which are in favor of the applicant. By saying that the policies are in favor of the applicant, we mean that process is less of a scrutiny and all those who have a plan which really does show potential may be able to get their loans approved. The only catch with them is that for security measures, they provide loans to groups of people instead of individuals so that tracing them is not a problem in case they try to abscond. Further, there are some lenders who finance only those businesses which belong to a particular segment of the corporate world.
In certain countries, the government policies are such that they grant loans to small business enterprises to help expand their countries economy. Although the maximum limit of such a funding is very limited, it is of a great help to those who are in real need of money. An advantage of this mode of funding is that there is no repaying required which can be a great morale booster for the firm just starting. To prevent misuse, once the amount has been exhausted, a detailed report of the expenses needs to be submitted to the government.
Keeping these aside, the best form of funding even today is none other than personal savings. Small businesses do not require large sums of money and hence, if the amounts can be spared from the personal savings, nothing would be better as the method is safe and secure.