If your goal is to start your own small business or SME, then you are likely looking into small business funding. This type of funding is specifically geared towards helping SMEs improve their products or services and build their business to reach the heights they have been dreaming of.
Small business finance is one of the most effective routes to take when trying to fund an SME but there are other avenues you can look into, such as speaking to friends and family, looking into a Kickstarter programme, or consulting with angel investors.
If you are wondering how to finance your small business you should consider all options. As a business owner in South Africa, there are several available to you, all of which can help with business development and improving your cash flow.
Related:Small Business Funding In South Africa
So, if you have a business plan ready and are interested in a small business loan, keep reading for just some of the ideas you can use for funding your SME.
1. Look into crowdfunding
In today’s modern world, there are new and exciting technologies coming out all the time, and one of these innovations is crowdfunding.Crowdfunding is a way of raising money by using online platforms to encourage people to donate, sign up, or invest in your business.
Crowdfunding works by allowing you to put together a campaign and tell investors or donators how much money you need to raise over a certain period of time.
You should include incentives such as promising investors a free product once money has been raised to get your business off the ground or discounted rates for services from your business. However, you will need to be sure that, if you do not succeed, you are able to repay them.
2. Small business loans
There are loans that are specifically geared towards small businesses that you can look into which might offer you affordable interest rates due to the size of your business.
A small business loan will have the same or similar criteria as a business loan with the caveat that you will need to provide proof that you have been in operation for at least one year. This is to ensure that the lender will not lose money by providing you with a loan.
A small business loan might be an ideal solution for an SME that is looking to expand and grow. For example, you might be wanting to introduce a new product to your audience but you do not have the funds to market it and produce it. This is where a small business loan will come in handy.
You can work on improving your offering and allow you to boost your business, but be sure that you will be able to repay this loan.
3. Speak to friends and family
If you have a family member or friend who is willing and able to help you with some financial aid, then you can speak to them and ask them if they can help you out.
Related:Government Funding And Grants For Small Businesses
It is important to remember that you will need to repay them and provide them with proof that you are earning enough money for their investment to make sense.
You will need to be absolutely certain that your friend or family member can provide the money when you need it and be sure that you have a good level of trust between each other.
This will ensure that the relationship will not crumble and that the money will not come between you if you fall on hard times. Be sure to draw up a legal document that you both sign to ensure that everything is above board and continuing properly.
4. Take out a business loan
Arguably the easiest and most effective way to fund your SME or small business is to take out a business loan from a financial institution. It is a simple process and will allow you to finance whatever business venture you have in mind.
Related:What You Need To Know About DTI Funding
There are some criteria that you will need to meet for a business loan, including needing to provide:
- A company registration and VAT number
- Relevant and up-to-date banking details and balance sheet information
- Your contact information and registered address needs to be up-to-date and complete
- The details of the director, all members, and trustees
- Details of the asset you wish to finance
Your business plan should be clear and offer detailed information too. A business loan is an ideal solution for your SME that wants a reliable and safe way to fund your ideas. You can look into other avenues but be sure that these options are viable and are able to be repaid easily.
Related:Attention Black Entrepreneurs: Start-Up Funding From Government Grants & Funds
