Raising finance for you business is a daunting task and needs to be done with lot of careful planning and proper application of mind. There are lot of options for raising finance and one need to carefully evaluate all the nitti gritties of the various options before arriving at the final decision.

You could be needing finance for various things such as expansion purpose, repaying the previous debt and so on. Although, all the businesses have retained earnings or idle cash, but many a times, these both do not suffice your finance requirements.

Following are the tips that will help you in raising finance for your business:

Determine the amount which you wish to raise after careful and detailed planning. Majority of the companies or business needs to raise finance for a new project or expansion purpose. Prepare a detailed project report which will help you determine the amount you need to finance the project. Make a solid and rigorous plan by covering all the important aspects as even a single loophole in the plan will lead to the rejection of your plan by the finance provider or lender.

Apart from the plan, make sure that you show a commitment and dedication towards the project or for any other purpose for which finance needs to be raised.

There are various options available for raising finance such as family, relatives, banks, bank OD, venture capital, equity, debt etc. Decide on the options which you feel will be cost effective for the company on a whole. You can choose one of the options or the combination of the options depending on your requirement. Many a times, a business might require huge funding for expansion and other purpose. Getting such kind of huge sum from single source of finance won’t be possible or feasible. In such a situation, you can very well get your entire funding split between couple of these options.

Once you have selected the options, work the effective cost of raising the debt. See, whether it is cost effective for the business to raise the finance through these options. If you feel that the effective cost of debt is on higher side, you can work with your team to find an alternative and cheaper source of financing. You can also try and negotiate with your lender to bring the cost down. If you have a extremely good credit reputation, the lender might make an exception for you  and reduce the cost of lending.

While preparing the forward looking statements, check whether the company is going to generate enough cash flows in the future to repay the debt.

Don’t expect your lenders to say right away. Give them some time. All the lenders take in to consideration various factors such as the credit reputation or credit history of the company, cash flows to be generated from the project, the viability of the project and so on. If your lenders refuse, don’t get all bugged up. Ask them the reason for their refusal and accordingly make necessary changes in your plan or proposal. If the lender has refused to lend money due to some other reason, such as poor credit history or something, in that case you need to find some alternate source of financing which would be a costlier options for you.