Types of Financial Resources: 6 Viable Options for Business Expansion

For a company to be able to remain on its feet and evolve, it is extremely important to have competent financial resource management .

When it comes to business expansion, it is quite common to need to turn to third parties to finance a growth idea.

The problem is that, when due care is not taken, the company may end up taking on more debt than necessary and, therefore, is unable to honor its commitments. As a result, it finds itself forced to close down its activities.

With this in mind, one way to prevent this from happening is to thoroughly research the different types of financial resources to inject money into a company's cash flow and finance its expansion plan .

To help you, we have created this content with these 6 main ways of raising financial resources:

1. Bank loan
2. Government contribution
3. Crowdfunding
4. Angel investors
5. Venture capital
6. Invite a partner

Continue reading to better understand how each one works and the precautions you should take.

6 types of financial resources to expand your business

Raising funds can be done in different ways. Check out the main ones below.

1. Bank loans

Starting our list of types of financial resources, we have one that is quite common: bank loans .

Many companies, especially small ones, tend to turn to large banks in search of financing to expand their business, expand their infrastructure, etc.

This option for raising financial resources is quite valid. However, it is extremely important to pay attention to the interest rates imposed by these institutions.

With that in mind, it might be more advantageous to consider our next tip.

2. Government contribution

Continuing with the examples of financial resources for companies that want to expand their business, we have government support.

Through public banks the federal government offers easy credit programs for entrepreneurs who need money to finance their projects.

The advantage is that interest rates are significantly lower than those applied by private institutions, which favors the management of the company's financial resources.

3. Crowdfunding

Another way to raise financial resources for companies is through so-called crowdfunding .

This is a form of crowdfunding. A group of people who believe in your project decide to invest specific amounts to finance your idea.

4. Angel investors

Angel investors are also examples of financial resources for companies that are seeking financing for their expansion projects.

These are individuals who take money out of their own pockets to bet on an idea that they believe can generate good returns.

Generally, angel investors already have some experience in the market in which the company that needs money operates, and can also provide advice on what the entrepreneur should do to make his or her idea work.

5. Venture capital

Venture capital is a type of investment fund aimed more at companies that already have significant experience in the market and are looking for resources to finance their expansion.

Using high-risk financial resources such as VC is not easy . You need to explain in great detail the different aspects of your business model and product.

Venture capital investors prefer to invest in small and medium-sized companies with high potential returns. In return, they ask for a “generous” share of the profits.

6. Invite a partner

Closing our list of examples of business financial resources, you can call someone you trust to become a partner in your company .

To do this, he will need to invest enough money to finance his expansion project. In exchange, the partner will have a share in the company's profits and will be able to vote on business decisions.

Is it clear what the main types of financial resources are?

Remember that a business expansion strategy requires a lot of planning and dedication. This will allow you to efficiently and healthily manage your financial resources, ensuring the sustainability of your business.