Sources of Capital For Your Business in Times of Crisis
Posted on November 27th, 2008
Alternate funding in the Philippines that will probably be is the best chance for capitalization during this time of Global Economic Crisis. Here are the 8 alternative sources that business owners in the Philippines can tap for cash:
1. Credit unions and Microfinancing Coops. This is all about membership, credit union sees you as a member instead of a number making credit easy and does not require many legal requirements. Though, credit unions were made to provide credit at reasonable rates, experts’ say their rates vary and can be as cautious as banks.
2. Microlenders. This is very suitable for those with imperfect credit because most of their loan is less than P5,000 per person. They have flexible loan terms and accept collateral but they are also hard to find and they limit what they give. Also, microlenders often take just as long to evaluate your business as banks do.
3. Family and friends. Usually minimal transaction without any lawyer fees, the F’s are often the most enticing option. It is fast and much cheaper but when you business went bankrupt you will feel much worse than what you feel when you lend money in the bank. Try to formalize you loans between you friends and family by doing that way it helps reduce awkwardness.
4. Factoring. This is the practice of selling your accounts receivables to a factoring company, which gives you a quick percentage. These companies make their profit on the fees they charge for their services, which start at around 1.5% of the financed receivables. It gives you instant cash but it is very expensive.
5. Venture capitalists. They have got a lot of money but could be a waste of time because only few will scrutinize your venture as thoroughly as banks will. Venture capitalists deals with higher-risk ventures so, be prepared to surrender partial ownership of your company if you score a deal.
6. Angels. Angel investors are prosperous individuals who invest at the very early stages of promising ventures. A business owner is a typical angel and you can also get expertise and human capital from the deal. But they are wildcards, they have their own rulebook because they own the money.
7. Credit cards. Only for those who are credit-worthy. It comes with a high interest rates, plus the possibility of damaging your credit.
8. Grants. It is an official federal portal for information and applications for government grants. It helps businesses, when their venture falls into their target area. But most ventures won’t fit the criteria of grant-giving organizations.
