Ways to finance a business or projectConsider factoring:If your clients do not have a reliable history of paying their bills on time, your factoring fee could be high, which might make the cost of getting the factor too expensive.
As with any financial service activity, invoice finance products are susceptible to use by criminals to launder money. Both factoring and invoice discounting products facilitate third party payments and may therefore be used by criminals for money laundering activity. The different invoice finance products available vary greatly and the degree of risk is directly related to the product offering.
The level of physical cash receipts directly received within the invoice finance sector is extremely low, as the vast majority of debtors settle outstanding invoices by way of cheque or electronic payment methods. Therefore the susceptibility of the invoice finance sector at the traditional placement stage is very low. The risk within the invoice finance industry is at the layering and integration stages of money laundering.
The main money laundering risks within the invoice finance sector are payments against invoices where there is no actual movement of goods or services provided, or the value of goods is overstated to facilitate the laundering of funds. As stated, the level of risk will depend upon the nature of the product and the level of involvement by the finance company. Factoring should be considered to be a lower risk than invoice discounting, in view of the fact that direct contact is maintained with the debtor. Invoice discounting would represent an increased risk of money laundering due to the "hands off" nature of the product.
Get a bank loan:A bank loan is the most common form of loan capital for a business.
- bank loan provides medium or long-term finance. The bank sets the fixed period over which the loan is provided (eg. 3,5 or 10 year), the rate of interests and the timing and amount of repayments.
- he bank will usually require that the business provides some security (collateral) for the loan, although in the case of a start-up this security often comes in the form of personal guarantees provided by the entrepreneur.
- ank loans tend not to be offered to start-ups or businesses with a track record of poor profitabillity and cash flow. Such businesses are perceived as being high-risk by banks that, as a result of the credit crunch, are more cautious about the kind of lending they offer.
- Lenghty paperwork- Longer wait time- Requires strong credit- Usually requires collateral
Use a credit card:
By using a credit card, we are on view to some risks that you would never get out of it. Here if you do not pay on time, you will be in a huge problem, which will be difficult to get out.
- Allows you to build up more debt than you can handle- Damages your credit score if your payments are regularly late or you don't repay- Costs much more than some other forms of credit, such as a line of credit or a personal loan, when interest charges are incurred.
Try Crowdfunding:It is a creative method to earn money to finance your project, but it also drives you to some risks. With crowdfunding, the way to earn money will take more time that other methods; here you have to set a goal for how money you'd like to raise over a period of time.
- Greater risk of failure: A business that has been capitalized through equity crowdfunding arguably runs a greater risk of failure than one that has been funded through venture capital or other traditional means of start-up financing.- Outright fraud: Online forums and social media are ideally suited for equity crowdfunding because they offer wide reach, scalability, convenience and ease of recordkeeping.- Returns may take years to materialize (or may never accrue): An investor who invests through equity crowdfunding has an expectation of some return on investment in the future. However, return on equity crowdfunded ventures may take many years to materialize.
Raise Money from Your Family and Friends:
This method may sounds like a really trustworthy one because you are not talking or negociating with stragers, you are talking with family, the ones you trust more, but even if you negociating with them you´re risking their financial future and your relationship with them. for sure you have to make financial projections, as well as an evidence, so your family and friends will have the constancy that their money would come back, otherwise there would be some problems like:
- If there is no pressure for payment, the person will not feel pressured and will not payThe less risky way to finance a project between the previous options is trying with crowdfunding. For example, If I want to have a bakery, I will register me to a webside which help me to raise money with a relatively low cost than if I use a credit card or get a bank loan. Then, lot of people will "invest" their money in my project that will help me to begin my bakery. Firstly, I should begin the production at home for saving money and do not have expenses related to renting. Finally when I get some incomes, they will be distributed for all of the people who participated in the webside
