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Raising Capital for a Business amidst COVID-19

By CIOReview | Thursday, May 7, 2020

Cash continues to remain essential for accelerating sales cycles and handling expenses. The old saying 'You need money to make money' is apt for the current scenario, and businesses need to get back in the business and earn money

Fremont, CA: The unprecedented spread of coronavirus has brought about a new world order dominated by social distancing, making it exceptionally difficult for businesses to raise money. Although particular sectors are offering exceptions, it is still exceedingly difficult for the majority of companies to keep their businesses running and productive. For existing businesses, maintaining cash flow is a top concern under the given circumstances. Cash continues to remain essential for accelerating sales cycles and handling expenses. The old saying 'You need money to make money' is apt for the current scenario, and businesses need to get back in the business and earn money.

With the spread of the pandemic, there are a handful of ways for new and existing companies to get the funding they need to launch or keep their businesses running and productive. Here are a few solutions that can help a business get off the ground.

Business Loans

Commercial lendings are one of the most common methods to raise the required funding to run a business. Business loans are very similar to personal loans, and they are primarily dependent on a company's credit rating. The number of options available for loans depends on a company's credit rating, with a low credit rating disqualifying the eligibility for a business loan. However, in some cases, exceptions are made. Moneylenders often consider businesses with a less than perfect credit scores, while considering personal credit scores. Business loans can have varying interest rates, which are also dependent on credit ratings. The good news here is that interest packages have been attractive in recent times.

Crowd Funding Campaigns

Established businesses with well-known products will find it easier to appeal to the public and raise a part of the required funding from the crowd. This can help get a business up and run. Crowdfunding is a simple act of taking financial support from multiple people to raise a large sum of money. This can be an effective method for small businesses and startups that require significantly less capital to get going.

Partnering with Investors

For businesses with an excellent business strategy in place and a proven product or service, partnering with investors can be one of the quickest ways to raise money. However, in most cases, a partnership does not come without a sizeable offering from the side of the business. This can be in the form of equity shares or other kinds of royalty. In some cases, the money even needs to be repaid within a given time frame. Apart from the capital, a new business investor may have a lot more to offer. Businesses can make use of the investor's resources, connections, and ideas, all of which could launch the company into a growth trajectory.

Bootstrapping

This method of raising capital is typically for those who are brave and want to raise funds with minimal work. Bootstrapping is the process of making a self-investment in the business to give it the boost it needs. This is mainly possible for individuals with significant business experience. The biggest advantage of bootstrapping is the ability is to use the money as one pleases.

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