The Fortune of Small Businesses is Being Transformed by Revenue Loans

The Fortune of Small Businesses is Being Transformed by Revenue Loans
The Fortune of Small Businesses is Being Transformed by Revenue Loans
September 18, 2016

The growth of any business idea depends to a large extent the amount of funds they can access. A small business founded by an individual can blossom to the point where it becomes a public liability company with lots of investors and stand the chance of being listed on the stock market – which is the height of any business.

More financing options are opening up for small businesses

Unlike in the distant past when commercial banks and maybe thrift or cooperatives among business owners was the only source of funding for small businesses, the tide has changed rapidly and now, there are a lot of options available to them to choose from. Many of the new funding sources would rather look at the prospects of the business rather than the size of collateral they have.

Read also: Merits and Demerits of Purchase Money and Non-purchase Money Loans in Short Sales

Investors are playing a huge role in the life of small businesses

The transformation of most small businesses into mega businesses owe their vote of thanks to the different roles played by investors. To emphasize the important of investors, the founder and CEO of Zamato, Deepinder Goyal, has made it paramount and a point of duty to keep in touch with all the potential investors of Zamato. Investors are in fact the major source of revenue loans to small businesses.

Small businesses should always aim to lure investors

Deepinder Goyal keeps potential investors updated on the innovations and new happenings in the company. This is the mentality that small businesses should have. Small businesses should always come up with innovative programs that will either bring in new investors or give the existing investors a reason to stay. Small businesses that lack innovation will soon be out of business.

Read also: A Cash Business Loan might Just be Perfect for a Working Capital

Investors look beyond the present into the future

The reason why an investor will be willing to invest in a small business even when the traditional lenders fail is because most times they do not consider the current state of the business but rather will take their time to evaluate the future prospects of the business. If from their evaluation they think the business has something new to bring to the table, they can easily throw in their money hoping to reap from the dividends of the business in the future.

There are various small businesses can keep investors engaged

Every small business should engage their investors or prospective investors in one or more ways. The very common way in which a business can engage investors is by sending them e-mails on a weekly or monthly basis. You can also prepare newsletters containing important news about the business or anything you want your investors to know about and send it across.

Read also: What You Never Knew about the Small Business Administration Loans

The presence of an investor can benefit a business in several ways

Most small businesses owe their successful expansion to the intervention of investors agreeing to offer them revenue loans. Besides expansion, investors have also made some business diversification possible. Any business that wants to be a success needs to have more than one source of income and that is how diversification of production or services has helped many businesses become rich.

Cooperation and trust is all investors desire from small businesses

Most investors will require nothing more than the cooperation and trust to consent to invest their money into a small business. Co-founder and CEO of Ola Cabs, Bhavish Aggarwal, has raised several thousands of dollars from investors. Their latest was raising $210 million from SoftBank Internet and Media Inc. Their success has a lot to do with their good will and cooperation with their investors.

Read also: Looking for Ways to Finance Your Company: Try Asset Based Lending

Article highlights

  • Investors look more at the prospects of a small business rather than collateral.
  • Small businesses are seriously limited by funds.
  • Investors need to gain the trust of small businesses to be able to invest in them.
  • There are more funding options available for small businesses now.
  • Small businesses need to have programs that would lure investors.
  • Investors need to be in the know of the current happenings in the business.
  • One way of carrying investors along is sending them regular emails.
  • Diversification of business is more important than expansion.
  • The action of investors can be considered as revenue loans.
  • Bank loan used to be the only source of funding for small businesses.

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