Eleven sources of finance that small and medium sized businesses can use to finance non-current asset
In financing non-current assets, matching principle is applied so that the companies don’t run into financial difficulties.
The problem is that many managers of small and medium sized companies lack the knowledge of the variety of ways that funds can be raised to finance its non-current assets. Find below eleven ways to raise finance for your fixed assets.
- Retained Earnings. Companies can finance their project(s) through funds that have been withheld from previous periods’ earnings.
- Leasing and Hire Purchase. These can be considered for small assets. It could either be finance or operating lease.
- Secured Loans. Depending on the nature of the asset, it may be possible to secure a loan tied to that asset(s). This is the direct opposite of floating loans.
- Personal Savings. Certain fixed assets like computers and cars can be financed from personal savings.
- Grants by government. Grant is a sum of money given to an individual for a specific project or purpose. Some conditions have to be met for this grant to be obtained.
- Venture capitalists. Venture capitalists are companies that set out some money periodically to invest in risky but promising ventures. Google and some other big shots have recently joined the league.
- Business Angels. This is usually a group of wealthy individuals that specialize in investing in start-ups and small businesses
- Mortgage. Non-current assets like buildings can be financed through this method.
- Alternative Investment Market (AIM)/ Second Tier Market floatation.
- Enterprise Capital Funds (ECF). This body was launched in the UK in 2005. this is equivalent to the Small Business Investment Company (SBIC) of the US that has been around for about 47 years now. The SBIC has supported the early growth of companies like; AOL, Intel, Fedex, Apple etc.
- Funds from informal networks of; friends and family members. Informal network of friends may include some weak-ties that can come from our friend friends. This is an often neglected source of fund/finance for small and medium sized companies, yet so powerful that investments up to £500,000.00 can be financed through this medium if well harnessed.
You can get your UK loan without hassle by simply following the link below
PaydayUK
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