7 sources of financing for your business

To promote the creation of an SME or its expansion, it is essential to choose the most convenient loan in order to prevent it from becoming a nightmare in the long run. A correct choice not only has to do with interest and rates, it is also necessary that you take into account the level at which the idea is.

That is why we present you with 7 financing options, so that you can take into account the most appropriate one, according to your project or type of business.

1. FFF

Like Friends, Family and Fools is known as the first source of financing, as it is used for the constitution of the company itself and occurs when an entrepreneur starts his business thanks to the help of his family and friends.

2. Government Funds

They are used to generate business models and project development, that is, when it is more advanced than a simple idea. They are also used to create prototypes that help to market the product or service in the market. The main sources are funds from the Ministry of Economy (SE), Nafin and Conacyt .

3. Seed capital

It is a loan that provides the amount of money necessary to implement a company and finance key activities during the start and start of the project. It is delivered when the company is incorporated and has an important product, but requires money to operate or for working capital.

4. Angel investors

Companies that are operating generally receive this type of contribution, because due to their high innovative content or potential development, they attract credits. Angel investors are generally independent or belong to a club, since they style networks of this type of support in companies.

5. Venture capital

Also known as Venture capital, it is used when the company has a certain level of development; It is a fund that invests larger amounts. It is a temporary contribution of third-party resources to the assets of a company to optimize its business opportunities and increase its value. In this way solutions are given to business projects, risk and returns are shared.

6. Private equity

It is a fund for large companies and is used to expand the business or for internationalization. Provides capital in exchange for shares that the company grants. It also contributes with monetary resources such as contacts, best practices, administration, etc.

7. Bank financing

Companies can resort to bank financing in order to have a flow in the daily operation of the business. In addition to commercial banking, there are Sofomes that can help you, as well as companies dedicated to financial factoring. The important thing is to compare the products and bet on the one that best suits your personal needs, since the credit must be a tailored suit.

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Original source: Entreprenreur

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