How to Raise Business Capital in the Energy Sector
Studies show that only 25% of new startups survive up to the 15th year of operation, 20% die within the first year, while 45% pass the five-year mark. In many reports, lack of capital comes out as the culprit behind most business failures.
Going by the statistics, capital is an essential part of the growth in every business. But, venturing into the energy sector requires a bigger business capital compared to other industries. So how do you guarantee that you have enough funds to keep your business floating?
There are tons of funding alternatives you can explore, depending on the unique needs of your business. Read on to learn how to source funding for your energy business.
1. Apply for a Business Credit Card
Businesses, too, have credit cards that work pretty much like personal cards. These cards are easy to get, available for small and established businesses, and allow for instantaneous access to financing.
As a result, they’re the best choice for solving short-term business needs like internet services or client dinners.
However, it’s essential to remember that these cards only cater to business financial needs and not your personal commitments. Some of the ways to improve your credit rating include:
- Opening a business line of credit to start your credit file
- Doing business with suppliers and vendors that report payment histories to credit bureaus
- Shifting your business to an LLC
- Maintaining a wieldy amount on your business credit card and keeping your payments up to date
2. Raise Your Business Capital Via Loans
The type of loan most suitable for your business depends on your financial needs and the type of operations. Government-backed loans are the best to try out if you meet the specifications. Often, these loans charge low-interest rates.
Financial establishments like credit unions, banks, and other private lenders are also great avenues to seek funding for your business. However, shop around to ensure that you’re getting the best rates and fees.
This financing service offers easy-to-access and cost-effective funding to businesses like yours and could be an excellent choice for your capital needs.
3. Equity Financing
Equity financing involves seeking funding from a source with an arrangement that the financier gets a share of your business shares or units. Unlike a loan, an equity financer becomes a part of your business and gets a share of the profits you make.
The best part is that there’s no interest if you suffer a loss. Some of the common equity financing sources include:
- Business angels
- Venture capitalists
- Friends and family
- Public Float
4. Crowdfunding
Crowdfunding entails relying on individuals to share networks or donate funds to support a project. The backers benefit by receiving free products or merchandise in return.
It’s a great way to effortlessly source a large amount of non-refundable funding to start or expand a business. It also helps your business gain exposure and build a new client base.
5. Grants
Another great option is to check if your local government offers renewable energy funds in the form of grants and if you qualify. Grants are non-refundable government financial aids to businesses and other initiatives.
The Renewable Energy for Agriculture Program (REAP), for example, is a Californian grant. It aids the installation of renewable energy technologies for agricultural operations in the region.
Keep Your Business Growing
The core desire of every investor is to see their businesses grow and remain sustainable. However, business capital, lack of ready market, and insufficient experience have led to the closure of many operations.
Adopting reliable business growth strategies and a positive growth attitude can propel your operations beyond. Check out this website for more growth strategies and financial advice.
