Small businesses play a pivotal role in a country’s economic growth. Even though most small businesses are struggling with cash flow and growth finances, they are key to the economic success of America. The latter statement raises a question as to why small businesses fail within the first 3 years. To elaborate, small business owners are forever in dire need of funds for:
- Business growth
Business growth is the process whereby the business is improving its sales and in return increasing profits.
- Logistics, and
Logistics also called “inventory”, it is planning, implementation and controlling, placing of employees and other resources of the campaign that ensures the goal of the business is achieved.
- Other operational costs.
Operational costs are also called overhead cost which is money that is spent on business on day-to-day bases in items such as stationery, fuel, rent and etc.
Maybe business is not what it looks like from a distance? But, before digressing any further, let me introduce you to various methods of accessing funds.
Methods of Online Funding
1. Government Grants
A grant is a government funding method. It financially supports the business ideas and projects of its citizens such as entrepreneurs, universities, researchers, etc. These funds are sometimes regarded as “Free Money” because people think it’s a get rich quick scheme. However, there is a strict protocol in place before rewarding the grant. Some examples of grants:
- Fish and Wildlife Service Grants; and
- Emergency Communications Grants.
Crowdfunding is a process of acquiring funds through contributions from a group of people to fund a new business project, sports club or social enterprise. Accessing the funds is easy: you just have to come up with the viable idea, create a project and get rewards. An example of crowdfunding websites:
- Kick-starter, etc.
Factoring is a form of alternative finance in which a company sells its invoices (Account Receivables) to a third party (Factor) at a discount for capital raise. Factoring companies are financing companies that assist small businesses and startups with instant cash flow to cover business expenses while they are waiting for their payment from their customers. Examples of such companies are:
- Interstate Capital
- Factoring Company Guide,
- Crestmark, etc.
Invoice factoring could convert your customer invoices to instant cash: turning your business from facing financial challenges into a Tech Powerhouse.
Access to capital is one of the first things that all start-ups and small businesses should keep in mind. Fortunately, we have companies and organizations who are passionate about the success of the small businesses and startups in the country.