In terms of the basic logistics, setting up a new business has never been easier. The Internet has paved the way for millions of once-impossible entrepreneurship opportunities, motivating more ambitious individuals to become their own boss than ever before.
But what happens when you reach a stage where your business begins to outgrow its current confines? If you find yourself in a position where business expansion is a real possibility, what kinds of funding options are available to cover the costs of the project?
The viability of each available funding option varies significantly from one business and expansion initiative to the next. Each of the following is worth considering as an entrepreneur pursuing business expansion:
Personal Loans
Also referred to as unsecured loans, personal loans are issued on the basis of merit; your current financial status, providing proof of income, having a solid credit rating and so on, all important eligibility checks when applying for a personal loan. Unsecured loans are typically available up to a maximum value of around £10,000 and can be repaid over the course of one to five years.
Secured Loans
A secured loan can be more competitive in terms of overall borrowing costs, due to the fact the loan is secured against a valuable asset, usually the home of borrower. Secured loans can also be more flexible in nature and accepting of adverse credit. If you have assets deemed eligible to be used as security for the loan, you have a very good chance of qualifying for a competitive deal.
Specialist Business Loans
These facilities are issued exclusively for business purposes, often on the basis of a combination of the above factors. Some major High Street banks offer their own forms of specialist business loans, though the best deals on the market are often available from independent specialist lenders who operate exclusively via established brokers.
Borrowing from Family and Friends
This is usually the most cost effective option of all, as it is unlikely your close friends and family members will charge you interest on the money you borrow. Rather than asking one individual to provide you with a substantial sum of money for a given period of time, it may be worth requesting smaller sums from several sources to minimise the risk of loss on their part.
Property Remortgage
A competitive remortgage can be a simple and cost effective way to tap into the equity you have tied up in your home. You could take out a new loan on your home entirely, or increase the value of your current mortgage to gain access to the money you need.
Bridging Finance
If you are confident that you will be able to repay the full balance of the loan within a few months a bridging loan could be the most cost effective option; with loans for all purposes available starting at less than 0.5% per month, bridging finance is ideal for short-term borrowing where prompt repayment is a guarantee.
Author: Craig Upton