Ultimate Guide for Additional Capital Sourcing for Growing Businesses
So, you have been running your business for quite some time now. It is going great, but you know it could be better. The idea of expanding it has crossed your mind, but when you check your sales and income, you might not have enough funds for the expansion. You may need additional capital.
Additional capital refers to the money that is invested or added to an existing business to support its growth, expansion, or day-to-day operations. This capital can come from a variety of sources, such as loans, investments from shareholders, or profits that are reinvested back into the business. Additional capital can be used to fund a wide range of business activities, including the following:
- Purchasing new equipment or machinery
- Expanding the business into new markets
- Hiring new employees
- Increasing marketing and advertising efforts
- Investing in research and development
- Paying off existing debt
- Increasing inventory or product offerings
- Upgrading technology or software
Having access to additional capital in business is important for a business to achieve its growth and expansion goals. However, it's important for business owners to carefully manage their business capital.
How do companies manage their business capital?
Managing business capital is a crucial aspect of running a successful company. Below are some tips for managing your business capital effectively.
- Create a budget
Creating a detailed budget that tracks all income and expenses is important for managing business capital. A budget helps to ensure that the company is operating within its means and can help identify areas where expenses can be reduced.
- Monitor cash flow
Monitoring cash flow is essential for managing business capital. By keeping track of incoming and outgoing cash, businesses can ensure that they have enough money to cover their expenses and make necessary investments.
- Invest in the business wisely
Investing capital back into the business is important for growth and expansion, but it's important to invest wisely. Business owners should carefully evaluate potential investments and ensure that they align with the company's overall goals and objectives.
- Manage debt
Managing debt is important for maintaining healthy business capital. Businesses should work to pay off existing debt and avoid taking on too much debt that could impact their ability to repay loans.
- Build up reserves
Building up reserves, such as a cash reserve or emergency fund, can provide a cushion for unexpected expenses or periods of reduced income.
- Evaluate capital needs regularly
Business capital needs can change over time, so it's important to evaluate them regularly. Businesses should consider their current financial position, growth plans, and potential risks when determining their capital needs.
Sources of Capital That You Can Consider
If the current state of your finances is not enough for additional capital for your business, there are other capital sourcing that you may take advantage of. Here are some of the financing resources available for small or starting businesses.
Crowdfunding is a way for businesses to raise capital by soliciting small investments from numerous people through online platforms. Crowdfunding can be a good option for businesses that are in the startup or growth stage, as it can provide access to start-up capital without giving up equity. However, it requires a well-crafted campaign and marketing effort to attract investors.
2. Venture capital
Venture capital is a type of funding provided by investors to high-potential startups or small businesses. In exchange for the funding, venture capitalists typically require equity in the company. Venture capital can be a good option for businesses with a high growth potential, but it often requires a solid business plan and a convincing pitch to attract investors.
3. Business loans
Business loans are a common way for businesses to obtain additional capital. These loans are typically offered by banks, non-bank financial institutions, or online lenders and can be used for a variety of purposes, such as purchasing equipment, funding working capital, or expanding the business. Business loans often are available in two types:
- One that requires collateral or a personal guarantee
- One that does not require collateral or what we call a non-collateral loan.
Collateral Loan Options in the Philippines
A collateralized loan is one secured by collateral, such as a home or car. In this type of loan, the borrower pledges the collateral as security for the loan. On the other hand, a non-collateralized loan, also known as an unsecured loan, is a loan that is not secured by any collateral. This means that the lender is relying solely on the borrower's creditworthiness and ability to repay the loan. Determining which type of loan is better, collateralized, or non-collateralized, depends on numerous factors.
Collateralized loans are better for borrowers who have a lower credit score or a higher level of risk. This is because the collateral serves as security for the loan, which reduces the lender's risk. However, if the borrower is unable to repay the loan, the lender can seize the collateral, which can result in the loss of the property pledged. Non-collateralized loans are better for borrowers who have no assets that they can surrender to the lender. It is important for borrowers to carefully consider their options and choose the loan that best fits their financial goals and abilities.
For a more detailed list of collaterals, check the List of Acceptable Collateral for Small Business Loans.
Non-Collateral Loan Options in the Philippines
For non-collateral business loans in the Philippines, one institution is known for providing easy and quick financing for additional capital and other business needs. That is Esquire Financing Inc. or EFI. Being in the industry for more than a decade, with a focus on helping small and medium-sized enterprises, EFI understands the challenges of startup or growing businesses. That is why they offer loans without collateral, with minimal documentary requirements, and with a fast turnaround time. In as fast as 3 days or less, you can have your business loan amounting to up to P10 million.
In lieu of collateral, EFI checks the financial health of your business, including your cash flow, to determine the amount you can borrow and the terms of the loan.
If you are interested in getting a business loan from Esquire Financing, just visit our loans application page and see for yourself how easy it is to get your loans approved. Start fueling your business dream today!
For more information and updates, visit https://www.esquire.com.ph/ or follow us on social media: Facebook and Instagram.