Starting a new business or changing and expanding an existing business requires (as most of the funding). Very few people have the capital needed to establish a business, or who are able to start a business without having any capital investments. There is no doubt that among the many challenges with which to deal entrepreneur, obtaining financing is one of the more frightening tasks, complex stands in the way.
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The first task of the entrepreneur is to decide how much funding it needs for the construction business. A very important task because the sum is too low may not be sufficient, and the sum is too high can cause serious cash flow difficulties later. Once you have decided how much you require you need to decide on the funding source of your own choosing. This article discusses the types of sources in the market and the different characteristics of each source;
• The self-financing – financing the cheapest and most effective if you have it Asrcm. Without interest and without risk simply checking out or about to open a savings account at the bank without interest (interest Recall is less than percent) and investors regarding you trust the most. You yourselves. If you do not trust yourself, Do not go at all an adventure, stay employed.
• Family & Friends-common source of funding. Just go to parents, siblings, or friends and ask for their money To”c promise feeble return when business Yaniv. Risks associated with financing channels are; a. A bit unpleasant to ask. In. If you can not repay the loan – the friends you lost, the family must stay but you’ll face.
• loans – the most common way to obtain the financing business. Especially when it comes to small and medium businesses. The loans can be classified according to the criteria of the type of loan (short-medium-long term), or as a source of loan (banks, non-banking entities or state-guaranteed loans).
• The types of loans (short-term long-term) – short-term loans taken when a specific business flows readily. In this case take a loan or credit, and a few months later paid back. If there are bank guarantees and there is a good return capacity such loans are good. Rule – when there is a good return capacity (repayment ability test requires a thorough analysis of anticipated investment income expenses, etc.), it is best to return the money with minimal payments. In situations where there is uncertainty regarding loan repayment ability, it is better to extend the repayment time and reduce the amount of each payment. Remember fines for failure to pay high and may bring down your business.
• sources for loans – can be stated identify three types of funding.
• banks – making loans as an integral part of their job. Banks will give loans to a relatively reasonable rate and with a large variety of relatively convenient repayment terms. On the other hand the admission requirements of very strict bank loan. Especially when it comes to new businesses. The Bank may require a specific deposit any amount of loan or equity securities.
• non-banking sources – entities such as investment firms and credit card companies are also involved in providing loans. Unlike banks easier to get the loan. On the other hand generally higher interest rates.
• Funds and guaranteed loans – loans granted additional source of financing are funds for businesses. These funds were established to help businesses just starting out, and many of them funded by foreign donors. This is a good funding source, often guaranteed by the state. There are dozens of funds in each different type of emergency that it provides the maximum amount of funding and the market segment to which it is directed. This is a good alternative to finance the business in terms of rates and conditions for acceptance. However, this alternative requires good knowledge of market funds, preliminary preparations according to the requirements of the Fund, and sometimes waiting until it’s not short of money.
• Good adjustment of loan business needs, and to continue receiving optimum conditions possible require great familiarity with market financing. There are hundreds of sources of funding. Conditions for obtaining loans from various sources in the kind of guarantees required for the loan, the interest rate we pay, conditions of repayment (monthly deferred), indexation of loans and even fines. These conditions vary drastically from one funding source even after the client pays the customer the same body.