Funding Options

May 30, 2020

BUSINESS 1

Manyentrepreneurs may have ideas to establish businesses, but lackfinancial support or capabilities. Different funding options havebeen established for the entrepreneurs to select and start theirbusinesses. The paper describes and ranks various funding optionsthat can be beneficial to aspiring entrepreneurs.

  1. Angel Investors

The funding option involves investors investing in new orearly-startup businesses in exchange for 20% to 25% return on theirinvestment (Cassar, 2014). I will pay the debt based on the agreedpercentage of return on investment. I placed angel investors in thefirst position because it has managed to assist various businessesand most of them have strategic experience. Moreover, tacticalbenefits will be acquired through the funding option.

  1. Government Programs

Theprograms are established at the state, local, and federal levels tofund businesses and help them to start or expand. The governmentoffers grants and loans based on the size and potential growth of thebusiness (Abdulsaleh &amp Worthington, 2013). I would pay the debtusing the profit gained from the business in consideration of thesubjected interest and monthly payments. I placed government programsin the second position because they are reliable and support avariety of businesses.

  1. Commercial Loans

Creditunions and banks provide commercial loans to businesses across thecountry. Commercial loans are paid over a specific time with theinterest (Alsos, Isaksen, &amp Ljunggren, 2016). I would ensure thatI set part of the acquired profit for paying the debt. I will alsouse personal assets to pay the loan if profit is not realized. Iselected commercial loans third because it involves pledging aproperty as security for the loan. Moreover, enough time is allocatedfor the payment of the debt.

  1. Crowdfunding

Thefunding option involves allowing many investors to establish aninvestment in one business. The entrepreneur publicizes a businessidea after which the attracted investors or individuals decide tofund it for various gains. I will pay the debt using the profitrealized from the business (Cassar, 2014). I will also choose to payeach investor a certain amount based on the profit earned. I placecrowdfunding in the fourth position because businesses benefit fromthe various investors. Moreover, product advertisement is highlyachieved because numerous market connections are established.

  1. Invoice Advances

Businessesthat choose invoice advances for expansion or startup are engaged inagreement with the service providers. The funding option involvesbilling the services offered in invoices enabling the business to runsmoothly (Alsos, Isaksen, &amp Ljunggren, 2016). I would pay thedebt once the customers clear the outstanding invoices. I place theinvoice advances in the fifth position because it may not beconvenient if the customers fail to pay the invoices.

Inconclusion, funding options are important because they promote theestablishment and expansion of businesses. The potential expansion ofthe funded businesses must be considered to ensure that possibleissues are eliminated. The payment option associated with eachfunding option is a key aspect to consider during the selection.

References

Abdulsaleh, A. M., &amp Worthington, A. C. (2013). Small andmedium-sized enterprises financing: A review of literature.International Journal of Business and Management, 8(14),36.

Alsos, G. A., Isaksen, E. J., &amp Ljunggren, E. (2016). New venturefinancing and subsequent business growth in men‐andwomen‐led businesses.Entrepreneurship theory and practice, 30(5), 667-686.

Cassar, G. (2014). The financing of business start-ups. Journal ofbusiness venturing, 19(2), 261-283.

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