Sources of financing for business & professional

Business Resource Group ™2012

SOURCES OF FINANCING FOR BUSINESS & PROFESSIONAL


Identified Areas For Financing:

Professional fees dues Office space rental Equipment and supplies Business fees such as permits/licenses, setting up business structure, etc. Setting up services such as phones, Internet,

etc.


Areas of Financing

Creation of marketing materials such as business cards, website, etc.

Cost of running a business including monthly fees

Professional service fees for accountants, lawyers, etc.

Employee wages Startup Loan Emergency funds Selling of professional idea or product or

services Strategic partnership Buy in ownership of the firms


SOURCES OF FINANCING

I. ExternalII. Internal


Internal Financing


i. Friends And Relatives

Funds from friends and relatives who believe in the

business and its service or product concept is a possible

route to take


ii. Life Insurance

Professional service

entrepreneur can also

convert their investments in

life insurance policies and

other insurance products as

a source of funds for their

business usually at a very

low value, funds borrowed

at very low interest


iii. Leasing

You should consider adopting leasing financing

especially for cost associated with the startup cost

rather than buy this equipment’s. A lease requires little

or no money down and is an alternative to purchasing

such item as cars machinery or office equipment


iv. Retirement Plans

Professional can also use their

retirement plan as an alternative

source of financing for

professional seeking to fund

their businesses. There are

various independent retirement

plans that are flexible that allow

professionals to borrow against

vested benefits.

Different countries would have

different retirement plan

arrangement from which people

can borrow from them.


v. Informal Saving Sector

Internally in most corporate set up professional have

adopted internal revolving and informal revolving funds,

to advance lump -sum amount to meet the welfare and

economic needs of members. This revolving funds if well

harnessed, the professional could use them to fund start up


vi. Venture Capital

Private equity firms and venture

capitalist are also an additional

source from which professionals can

look towards as they seek

alternative source of finances that is

not attached to specific collaterals.

It is recognized that these P/E & VC

could support startups and

emerging growth companies that

that are run by professionals but

rather lack access to bank loans and

capital markets access to funds in

form of equity into their businesses.


vii. Personal Savings

Professionals would also

easily use their professional

earning saving to make it a

source for financing for

their business in future or

when they might require it.


viii. Sell Assets

Asset sales to relatives and

friends can offer a neat and

relatively simple alternative

to either loans or equity

deals. Put simply,

professional service firms

can sells one or more assets

to someone or a firm they

know or trust, the firm


ix. Rewarding A Loyal Management Team

Professional service businesses can also start up schemes

in their business that is aimed at rewarding loyal

management team to invest in professional business since

they share your vision, Partners can give loyal

management between 10% to 30% equity in this business


x.

Profit ploughed back into the firm as reserves


xi. Trade Creditors

A very important source of financing for

your professional service business may

be from the creditors and suppliers

with whom you do business


External Finance


i. Government Funds

Many government have set up fund that can

easily be used by new start up & young

professional, one of the objective of this fund

is to attract and facilitate investment in micro,

small and medium enterprises oriented

commercial infrastructure such as business or

industrial parks, stalls, markets or business

incubators that will be beneficial to youth

enterprises


ii. Money Lenders

Borrowing from money

lenders business incurs

risk and charges a

corresponding rate of

interest based on that

risk. The lender usually

assesses a variety of

factors such as the

strength of your

business plan, and your

personal credit history.


iii. Cooperative Society

Professional can also access

funds available through

various professional saving

and cooperative societies

where they are members. In

Some countries there are a lot

of professional SACCOS, and

they continue to provide low

interest rate loans, spread

over long terms than banks

and usually will not require

collateral other than

guarantee, which is easily

provided by fellow

professional reference


iv. Loan From Banks

These are funding from

commercial, the community banks

and specialized bank like CDSC

accounts. Professionals with

investments held in stocks can

borrow on account of these

investments. And those with collateral held in

group, partnership or joint venture

entities can also borrow on this

accounts.


v. Selling Your Business Ideas- Business Partners

Professional with vast experience and with new ideas to

set up businesses could as well begin to sell their ideas

and concept high networthy individuals willing to invest

their fortunes in their businesses.


vi. Multinationals

Some multinationals in

their attempt to set up a

foot print in the local

market have failed so they

are likely to support local

professional service firms

and create a working

relationship.


vii. Strategic Partnership- Corporate Support

Strategic partnering ,

they're the best alternative

for many companies that

find themselves either shut

out of traditional finances

deals or unwilling to

swallow the equity

valuations or interest

charges required to make

those deals happen.


viii. Debentures

Just like shares,

DEBENTURES are also

instruments for raising long

term finance “Debenture is

a document that either

creates a debt or

acknowledges .


ix. Securitization

Is the financial practice of pooling various types of

contractual debt and selling said consolidated debt as

bonds, pass-through securities


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Economy & Finance

Sources of financing for business & professional