Different Financing Alternatives for a Start up Business
Contributing with your own funds is the first step of financing. It is undoubtedly the best indicator of your seriousness concerning your business. Risking your own money gives confidence to other investors in your business. You may want to consider some family members or a partner to obtain additional funding. The credit business, the sale of shares and Leasing equipment is alternatives that can be considered before applying for a loan. For example, a contract of lease may be advantageous because it does not tie your cash.
The companies need to maintain a minimum cash to fund their daily operational activities, financial situation long term may depend on the resources that are achieved in the short term is why financial managers must take the necessary steps to obtain these resources, thus they must know which are the entities that at some point can help them out of a possible liquidity inconvenience. For instance, SkyCap Financial offers personal financing to Canadians, providing loans up to $10,000. You can also check Skycap Financial reviews where Hundreds of satisfied customers have posted their experiences on SkyCap Financial.
The resources of the company are fundamental basis for its operation, obtaining cash in the short term can in some way guarantee the validity of the company in the market, that is why questions rise such as: Where can cash be obtained quickly? How much does the cost of credit rise? What are the financial credit entities? What should be done to obtain a greater benefit? And many others that with the content of this writing are intended to clarify with the general presentation of the main financing alternatives existing in the financial market.
Banks
Banking establishments are the mainstay of the Latin American financial system, its main function is to receive funds from third parties in deposit and place them in the market through credit operations. A commercial bank takes the money delivered by the savers plus the capital that belongs to them and offers them on loan in exchange for an interest for the time that the money is in their hands and with guaranteed payment guarantee.
The base of operation of the banks for the granting of credit is based on the ‘commercial mutual’ under the demands of the surveillance entity, with respect to the term and interest, since the banking operation is of a character public.
The main Credit Operations of Banks are:
Overdrafts:
It is a very short-term type of financing, mainly aimed at covering cash needs. Normally it does not require a written form and its granting is prudential given that, due to the speed of its processing, it is normally the manager who individually grants the authorization for its realization. The cost is also agreed on a discretionary basis, without exceeding the maximum limits authorized by law.
Ordinary loans:
This is the system by which banks put money into circulation; they are all those loans that the bank offers between ninety days and one year. The cost of these credits is regulated by the limits established by the financial control entities. If these limits were exceeded, the crime of ‘usury’ would be incurred.
