Businesses across all industries need funding for day-to-day functions and long-term growth. To get business funding for these types of functions, many companies apply for funding through banks and commercial lenders.
Businesses seek funding for a variety of purposes. In this article, we will address the main reasons why companies seek funding.
What Is Business Funding?
Business funding describes the process of companies looking for financial resources. This search could be to aid in the completion of daily operations or to allow brands to grow. Decision-makers may decide business funding is necessary to keep up with industry demands or to step into new markets.
When considering how to get business funding, methods for seeking funds differ according to the type of business you operate, how much money is necessary to reach your goals and the industry you work in. It’s common for companies to receive funding through government grants, investors, venture capitalists and crowdfunding.
8 Reasons for Seeking Business Funding
Explore the most common reasons businesses secure funding.
1. Companies Need Working Capital
Having enough working capital is a must for a company’s financial health. Not having enough funding can adversely impact a business’s future. Most companies seek external financing to get enough capital to accomplish their work goals. For example, a loan might pay for short-term funding while you can use the rest of the money for the company’s growth.
Having enough funding allows your company to grab opportunities that come your way, such as investing in new products and services that can help your business develop further. Working capital can serve as a safety net when your business needs extra money, too. For example, if your business is seasonal, you should get working capital funding during the period when your company is not in demand to keep your brand afloat.
2. Companies Want to Purchase Assets
When your business grows, you need to purchase assets, such as vehicles and machinery, to keep up with the increased demands and sales. You may consider getting an asset purchase loan to pay for essential resources to encourage your company’s growth, especially if you have your eyes set on something expensive, like company cars for traveling employees.
Another good use for an asset purchase loan is buying new office and IT equipment so that your employees have the tools they need for their jobs and to improve your internal infrastructure. You may also buy new machinery for better and more efficient production.
3. Starting a Business
Startup businesses need financial backing to get off the ground. Although some entrepreneurs use their own money to start their businesses, it can be difficult for them to gain profit from self-funding alone. As a result, most business owners seek external funding for their endeavors, instead.
Entrepreneurs have various ways to get external funding, such as borrowing from friends and family or applying for bank loans.
4. Business Funding for Expansion
If you want your business to expand and succeed in the long term, you will need enough funds to act on your plans. This growth might involve hiring new talent, building out the products and services you offer or moving into a larger facility. Having the funds you need will open your company to new opportunities and help your business goals materialize.
5. Research and Development
New products demand extensive testing and development — especially when you work in technology and manufacturing fields. Not all companies have the money to kickstart a new product line or fine-tune their current offerings. Your brand might consider funding to think outside the box and offer something your competitors have yet to create.
Once the development phase is complete, any funds left over from your research might be put toward prototypes or final production.
6. Brand Acquisitions and Partnerships
Funding a business is a proactive way to complete company acquisitions and establish new partnerships. You may find yourself in a situation where joining forces with another player in the industry lets you serve your customer base in ways you were unable to do before.
Additionally, new partners in your field may expect compensation for bringing you along on their mission. Brand acquisitions and partnerships could be reasons your company seeks funding, as a partner may explore other options if you’re short on money to finish a deal upfront.
7. Marketing Opportunities
Customers will only buy your product or choose your service if they know about it. Often, companies search for funding so that they can bring marketing channels to life.
You might pour funding money into spreading the word about how your offerings are a cut above the rest to increase sales.
8. Meeting Compliance Standards
Your industry may require your business to follow regulatory demands. Holding a special certification could be pivotal in your company’s ability to work in a certain space from a legal standpoint.
Fortunately, funding options for your business make it achievable to cover costs associated with obtaining certifications so that you can eliminate the chances of receiving fines and harming your brand’s reputation.
How to Get Funding for Your Business Via a Factoring Company
Seeking funding from a factoring company is beneficial for several types of businesses. This way, you will get the money you need to start or expand your business. You also become available for opportunities that were once unthinkable because of your previous spending limitations.
By finding a factoring company you can trust, you can get the money you need to help your business thrive in a competitive market.
Contact Porter Capital to Get Business Funding
At Porter Capital, we offer working capital solutions to companies in various industries nationwide. Since our inception, we have provided $6 billion to businesses in need of financial factoring — and we want to see this number go up from here.
We proudly offer our financial services, including invoice factoring, accounts receivable financing, dip financing, working capital loans and asset-based lending, to our esteemed clients. For inquiries, contact us today.
