Maintaining a business can cost you a considerable amount of money. There’s equipment to be invested in, marketing costs to be paid, and employees to invest in. And the list doesn’t stop there. As a result, business owners look for external forms of funding.
Here are three ways to fund your business:
1) Equipment leasing
There are many benefits to equipment leasing. Equipment leasing is a great option to consider when your business needs to replace outdated equipment but lacks the capital to do so.
With equipment leasing, monthly payments are manageable. Large upfront sums are not required, allowing you to invest in other business initiatives.
Advantages of equipment leasing:
- Requires less upfront money
- Maintaining the equipment is the lender’s responsibility
- Tax deductible
- Keep up with ever-changing technologies
2) Equity Financing
Equity financing is the process of raising capital through the sale of shares in an enterprise. The greatest advantage of equity financing is that there is no loan to repay. Instead, the investor receives a percentage of your company. Since they have invested with your company, they will mostly likely have control over business decisions, successes and failures.
With the help of angel investors and venture capitalists, equity financing allows companies to focus on business strategy and business growth while the funding comes from an outside source.
Disadvantages of equity financing:
- No tax tax benefits
- Shared ownership
3) Bank Loans
Bank loans are designed to finance the purchase of new equipment and inventory. The bank (or other lending partner) agrees to loan a business funds that must be paid back within a certain period of time.
In addition to paying back the loan, you are also responsible for paying the interest associated. This is determined by the length of the loan and the amount borrowed.
Loans can get pretty pricey. However, once the loan is paid off, your ties to the lender are complete.
Disadvantages to bank loans:
- Difficult to obtain
- Not flexible
- High interest rates
The Bottom Line:
Are you open to giving up equity in your business? What about paying costly expenses on a monthly basis? If you answered no, we don't blame you. That is why equipment leasing is a great alternative. You, the business owner, maintain full control over your company without breaking the bank. If you’re interested in a complimentary consultation, please click here to get started.