subject: How To Raise Cash For A Small Business [print this page] All businesses need to raise cash at some point. Sometimes, this additional cash is needed to help the company to expand, at other times it is to help the company to weather a lean time or deal with a cash flow issue. Good accountants can help you to get the finance that you need at the cheapest possible price.
Amongst the sources you can use to raise finance are: overdrafts, short or medium term loans, venture capitalists, investors, shareholders, mezzanine debt, hire purchase, leasing and family or friends. Each method has its own pros and cons, an accountant can help you to understand what those pros and cons are. Most importantly they can work out the cost of each option to your business.
As well as borrowing money you can also occasionally finance growth by obtaining grants from local development agencies, the EU, government funds and local commerce communities. Even if grants are not available, you can still obtain loans with very favourable rates from these sources.
When you need extra cash for your business changing your cash flow can inject a one off sum of money into your business. Selling older equipment to raise funds and using hire purchase or leasing to spread the cost of buying or running the new equipment that you replace it with is one method of doing this. Their is often the added benefit of bringing you production process up to date and improving productivity and profitability.
If you are owed money by customers you can sometimes improve your cash-flow by raising money using invoice discounting or invoice factoring. This is quite a complicated and specialist way of borrowing money, so you will need the help of an accountant to help you to raise money this way. Mezzanine debt is another option that your accountant can help you to explore, however this form of loan is expensive.
Once you have decided on which loan or grant you are going to use, your accountant will re-work your accountants to show the new funds and the costs of paying those funds back. At this point it is a good idea to tweak your business plan to ensure that those new funds are spent wisely, so that your business moves forward rather than standing still.
by: Jonathan Sharden
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