siliconindia | | APRIL 20219To better understand the term angel investments, it is the opposite of venture capitalists, whose main goal is to get profits for your businessUnlike equity financing, the investor has no direct owner-ship of the company or business.For your business to be eligible for the revenue-based funding, it must plan to generate revenue; not necessarily profits but a profitability path. According to most investors, profitability decreases the default risk that the business has and reassures the debtor's ability to service the debt. When drafting your presentation or proposal for the revenue-based funding, you must clearly show that your business can satisfy the re-quired terms and generate revenues.Pros of Revenue-Based Funding· The funding options have long-er repayment terms· You benefit from larger financ-ing amounts· Your business does not get eq-uity dilution· The eligibility criteria and re-quirements are friendly and convenient for most startupsR&D ADVANCE FUNDINGR&D advance funding, commonly known as research & development finance, gives startup businesses a chance to get their future R&D refundable en-titlement in the form of an advance loan. Usually, the R&D credit is considered a future receivable, and businesses get that receivable funding service. While the application pro-cess seems a little hectic, it is worthwhile. Businesses begin by submitting funding applications. An expert from research development finance will then come and assess your cred-ibility for the funding. Afterwards, an R&D advisor will ver-ify the qualifying expenditure and determine whether you get the funding. Once the funding has been approved, you will get an R&D debt finance facility to access the funds. The best thing about the funding is that it is deducted from the tax returns after the financial year ends. Any proceeds from the tax return automatically go to repaying the loan.Pros of R&D Advance Funding· Attractive low rates· You get quick and efficient services· The funding has attractively low rates and low risks generally· You maintain full control of your business· Your company sells no more equity· You get friendly terms for the repaymentHOW TO CHOOSE THE BEST FUNDING OP-TION FOR YOUR STARTUPStarting a new business has its ups and downs. Without reli-able funding by your side, it can be pretty tasking to get your groove on. Lenders require a few things before funding your business. The first step is getting all the paperwork organised for quick retrieval. Here are a few aspects to look out for when selecting the best funding option for your startup.ASSESS YOUR LONG-TERM GOALSAs you anticipate starting your business, you must check the long term goals and know the fund-ing that works best for you. Most people start a business with the hope that they will begin making profits almost immediately. Well, this does not always happen, and businesses may take longer to recoup the initial investment. Check your business's purpose and the milestones you in-tend to cross in the next ten or twenty years. With these answers, it will be-come easier for you to make the right choice for funding.CHECK THE INTEREST RATESMoney borrowed often returns as principal plus interest rates. These rates will then influence the total cost of the funding. You should concentrate on finding affordable fund-ing options. Assess the interest rates from the potential lend-ers and ensure that you get the most competitive quotes. Do not be afraid to negotiate and ask questions.CONTROL FROM THE LENDERSAll these funding options have their intricacies. The most common one is the control of the lenders. Some options will take a particular percentage of the company, the revenue, or some assets. If you surrender partial ownership of your business, you will be giving up control. As you choose the funding option, think about the control you want for your business. If total control is important to you, choose options that allow you the benefit.CONCLUSIONHave you enjoyed reading this article? After understand-ing these startup funding types, we hope that you will enjoy making the right choice as we did when writing it. As you choose the funding methods, you must carefully check the terms and conditions to avoid complicated clauses. Better yet, you can read the contract with your lawyer and get a clear understanding of the terms before penning down to sign. This is because the terms can be binding and mess your business up. Have fun getting your business on its feet.
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