Discover all the sources of business funding for business growth that will take your business overseas.

• Many funding options are available for you, such as crowdfunding, angel investors, venture capital, government funding, bank loans, peer-to-peer finance, and friends or family financing. Each option comes with its own advantages and risks. 

Why is funding important?

Businesses across require funding to sustain their day-to-day operations and long-term expansion. Whether you own a startup or small and medium enterprise (SME), you may need investment for your business to grow and produce a healthy turnover.

Even if you feel your business is financially secure and prepared, acquiring additional funds can help you face potential obstacles. Not just that, it can also help you grab overseas opportunities and expand internationally. 

If you're planning to get funding for your business, start planning early before applying for funds and research to ensure you're equipped with the best funding options. It is also essential to connect with potential investors and other businesses through networking and be prepared to pitch to them. 

Develop a strategic growth plan

The first thing you need to do is to make sure that you have a strategic growth plan when brainstorming business ideas. Essentially, this business plan details your expansion, building off your existing business plan and using financial forecasts to establish short-term and long-term goals. This growth plan will not only bring your business to where you want it to be but will also help you in your requests for financing because investors and lenders want to see your business growth is sustainable. If you have a strategic growth plan for your business ideas in place, you can approach investors and lenders across many funding options.

What are the sources of business funding? 

Plenty of business funding sources can help business owners like you achieve high growth and cater to your business needs. Sources include crowdfunding, angel investors, venture capital, government funding, bank loans, SBA loans, peer-to-peer finance and more.

Crowdfunding

Crowdfunding is a common practice of asking a large group of people to contribute a set amount of money to a specific cause or project in exchange for various rewards. Crowdfunding can be classified into two broad categories: equity and reward. 

Equity is when you give away a portion of your business, whereas reward is when you give away non-monetary items in exchange for cash. Equity crowdfunding allows investors to fund multiple projects that diversify their portfolios and expand their financial opportunities. This will help to put your business before the international audience if you're looking to expand globally. 

Bear in mind that each crowdfunding platform is unique as they have specific requirements needed as well as the associated fees. So, carefully consider your options before committing to any platform.

Angel investors

Angel investors are typically high-net-worth individuals who make early-stage investments in your businesses in exchange for equity or ownership equity. They are only interested in financing your businesses if it is likely to be sold or make it to the IPO stage. 

However, angel investors can also provide you with valuable expertise and advice to achieve high growth in business development. They can also assist in introducing your business to new markets and opportunities which will be an advantage for you if you're aiming for international expansion. 

Venture capital

Venture capital (VC) firms are the next step up from angel investors. When you need a large sum of money in exchange for a significant percentage of your business, you might consider approaching a venture capital firm. Venture capital is the preferred funding method for high-growth startups that can help drive the global expansion of SMEs. 

Also, it's a highly competitive field, so you'll need an outstanding strategy, a rock-solid business plan and a killer pitch. 

Government funding

If you own a small business, there are several government grants that you may be eligible for. Government grants are commonly available for small and medium businesses to cover the cost of premises, plant, machinery and IT equipment.

Each grant has its application process and qualification criteria, so check these first, as there is no guarantee that you will be eligible. However, these are worth it if yours is a new business.

Bank loans

Bank loans can be used strategically to bring affordable financing that fits the company's growth plans. Thus, there are better options than bank loans if you're looking for short-term financing for your business. 

The bank will determine the loan's terms, including the payback period, interest rate, payment frequency, and payment amount. The terms may vary, but all require collateral to secure the loan. This collateral will usually be in the form of a personal guarantee from the owner to ensure that the lender receives payment even if the business defaults on the loan. 

Bank loans can help you expand globally in a way that can still create new business opportunities for you even without a credit facility. It also provides you access to working capital and business loan. Therefore, looking around for the best rates and repayment terms is worthwhile if you intend to take out a bank loan.

SBA Loan 

If you own a small business, you'll probably look for ways to improve your operations further and increase sales. If you're in this situation, it can be the right time to consider a Small Business Administration (SBA) loan. 

SBA loans refer to a type of bank loan with more stringent eligibility requirements. It collaborates with participating banks across the country to make loans more accessible to startups and small businesses. 

If you believe you might be eligible for an SBA loan, reach out to the nearest SME corp branch.

Peer-to-peer finance

Peer-to-peer (P2P) finance connects smaller-scale investors with small businesses that require capital, eliminating the middleman. With P2P financing, you can obtain funds without going through strict regulations set by the banks.   

Friends and family financing

Relying on friends or family for financing is a flexible way to secure funding. Getting a loan from someone close to you may or may not include equity or ownership stake requirements, but it will almost certainly have favorable payback terms. It would help if you also reminded yourself that receiving funds from your friends and family can be difficult and emotional. 

So, it is important to provide them with your strategic growth plan and business plan so they can see how serious you are about your business growth. In addition, it would be best if you always worked with a lawyer to formalize the financing agreement to reduce the likelihood of animosity on either side later.