Running a business is no easy feat, and there are so many different factors that determine your success. A lot of these factors you can actually control as well, so you can essentially be in charge of your own success. Running a tech company may require a bit of a different approach as you’ll need to focus on buying the latest technology. However, this can be quite tricky to do if you don’t have the funds immediately to hand. So, keep reading and discover the 5 types of funding for tech companies!
- Small Business Loans
Small business loans are one of the most common types of finance for any company, but especially tech companies. Using a small business loan for funding is a great way to receive all the cash you need at once, rather than waiting for your savings to catch up. Each lender will have different criteria that you’ll need to adhere to though, so it’s important that you check it out before applying. You’ll also need things like a good credit rating for your business, so it’s worth seeing where yours it at beforehand as well. Interest rates are another important aspect that you need to consider when applying for business loans. These will differ from lender to lender, so it’s vital that you shop around for the best deal. With the help of a small business loan, you could easily buy all the tech that you need for your company and still have some left over too. So, be sure to take this option into consideration when looking for funding.
- Business Credit Cards
Most people have used a credit card before, but not many business owners know that they can make us of one as well. A business credit works in exactly the same way as a personal one, except you’ll find that your credit limit is a lot higher. This is because businesses are expected to need more money to finance themselves. The beauty of a business credit card is that you can spend how much you need and pay it off slowly. When you take out a loan, you might end up with more than you need. It doesn’t matter how much of your loan you use; you’ll still have to pay back the whole amount. Whereas with a credit card, you’ll only repay what you actually spend. This can make it a lot easier to manage your money in the long run and you’ll be able to repay it on your terms with flexible payments.
- Investors
A great way to provide your tech company with funding is to look for investors. Typically, these will provide you with the capital you need in exchange for a stake in the business. This option can work well for owners who don’t want to get into debt, as the money will be repaid to them through your sales. Investors can also provide you with inside knowledge of your chosen market too, as they’ll often be experts in that business area. Some investors (sometimes called angel investors) will provide you with the money you need without taking a percent of your business, but these aren’t all that easy to come by. While this option is debt free, you do need to be prepared to lose some ownership of your business. So, if you’re ready to do that, then looking for an investor could be your best bet. You never know what priceless wisdom they could impart on you as well!
- Crowdfunding
Another method of funding your tech business without debt is to take a look at crowdfunding. This involves using an online platform designed for this purpose only and asking members of the public to donate to your business. Oftentimes, their donations do provide them with something in return like early access to your products or services. This can really make all the difference when it comes to people actually donating to your business, as a lot of people will expect a little something to show your gratitude. While crowdfunding is great, it’s not always guaranteed, and you may not hit your goal. So, you need to take crowdfunding with a pinch of salt and be prepared for it not to work. But if you’re lucky enough for it to work, then you’ll be extremely satisfied with the results.
- Business Overdraft
Finally, we have the business overdraft. Again, it works very similarly to a regular one you’d have in your personal finances. A business overdraft will have a higher limit to what you can spend, much like the credit card. This is because as a business, you’ll most likely need a higher amount of funding. As well as having access to more money, you’ll be able to pay it all off in one go at the end of the month or lower it down over time. You do have to be aware of interest rates though, as these will still apply on a business account. You don’t want to leave paying it off for too long, otherwise you’ll be hit with large overdraft charges. So, be sure to take this into consideration before hitting your limit on your overdraft. You don’t want to end up worse off than before, so make sure you stay on top of your overdraft just like you would your credit card.
There are lots of different ways you can fund you tech company, and these 5 are some of the most common. They’re also some of the easiest to obtain as well and they’re methods of funding that you’re probably used to using in your personal life. From a small business loan to crowdfunding, there are so many ways that you can support and fund your business. So, if you’re running low on cash and aren’t seeing the growth you’d like, be sure to take these options into account. You never know just how much of a change they could make!
