Are you looking to expand your business? Business expansion requires a lot of funds. At the time of expansion, it is important to ensure that your business operations do not get compromised. Whether you are branching out to a new field or you are opening a new outlet in another location, expansion may drain away funds. A golden rule of thumb says that your current business operations should not grind to a halt while expanding your business.
When it comes to expanding your business, earmarked cash will come in handy, but it might not suffice. Many entrepreneurs struggle to have sufficient cash to invest in business expansion. Fortunately, in order to bridge the gap in earmarked cash, you can consider borrowing money from direct lenders.
Though funding can help you bridge the gap, there are various types of business funding. Each one of them is different and has pros and cons. A rule of thumb says that you should carefully compare the cost of funding sources for business expansion. Some of them might cost you an arm and a leg while others do not.
Funding options for business planning for Irish companies
Here are the funding options that you should consider while planning business expansion:
SME business loans
SME business loans are available from direct lenders and banks. However, the former is more flexible than the latter when it comes to signing off on your loans. Banks generally accept applications from businesses with a strong credit and trading history. There are some entrepreneurs who face challenges in maintaining a good business credit rating. They can borrow money from direct lenders.
Business loans in Ireland from direct lenders come in all shapes and sizes. It is essential that you borrow the right type of funding in order to expand your business:
• If you need a small amount of money to fund the gap in earmarked cash, you can consider same-day business loans. They are quickly approved. Interest rates are competitive for these loans. Businesses with compromised credit histories are also accepted.
• If you need a large amount of funds, banks can come in handy. They provide term loans. However, if you have been refused elsewhere, you can borrow money from direct lenders. They can provide you with funds even if your trading history is not sufficient and your credit score is less than perfect.
• Asset financing is ideal when the expansion involves upgrading machinery. The asset purchase itself serves the purpose of collateral.
• It is likely that you are struggling to have enough working capital to invest in expansion because your money is tied up. In order to unlock working capital, you can consider invoice financing or working capital loans depending on your business model.
Each funding option has its own pros and cons. Make sure that you choose the right funding option that suits your needs.
Enterprise Ireland supports
Enterprise Ireland is a government-backed agency that helps startups and established businesses to grow and scale. It provides financial funding, equity investments, and advisory mentorship to help you keep your company growing.
The best thing about Enterprise Ireland is that it provides tailored grants to businesses throughout their growth journey. These funds can be utilised for research, training, innovation, employment and sustainability. The ultimate goal of these grants is to help you grow with greater productivity.
Enterprise Ireland supports are generally ideal for those who are looking to expand their businesses internationally.
Private investment options
It is likely that loans do not help you meet your requirements, or you fail to secure them. If you need capital to expand your business, you can consider private investment options:
Angel investors
Angel investors invest their own money in small businesses and startups with a high potential for growth. They will not be able to invest as much as venture capitalists, though. They provide businesses with early-stage capital. It is not a loan, so you do not have to give it back to them. They will require a share in your equity and profits.
At the time of raising capital from angel investors, bear in mind that they will become your shareholders. It is not easy to make any decision without their involvement. Chances are you are not on the same page. Yet, you acquiesce to their demands. Angel investors can back out of your business if they find that your business no longer has growth potential.
Venture capital funds
You can borrow money from venture capitalists as well. The difference between venture capitalists and angel investors is that the former invest a pool of funds from other investors. This is why they are able to fund larger capital. They invest in startups as well as established businesses as long as they have the potential to grow.
You must have a strong pitch to blow them away so they decide to invest money in your business. However, as is the case with angel investors, venture capitalists will invest money in exchange for a share in profits and equity.
At the time of considering raising capital from venture capitalists, carefully weigh up all pros and cons.
Seed funding
Seed funding is ideal for those businesses that need money to turn their business idea into a product. These funds are available from venture capitalists and angel investors. The raised funds could be utilized in building a basic version of a product, testing the market, hiring team members, and paying for basic startup costs. Bear in mind that you will have to lose a portion of equity.
The final word
There are various funding options that you can use to expand your business in Ireland. You can consider borrowing money from banks and direct lenders or raise capital from angel investors and venture capitalists.
Whatever option you choose, it is vital to understand the pros and cons of each option. Remember that you will have a long-term impact of your choice. You should exercise caution while deciding on them.
