One of the biggest challenge small businesses face is locating capital for their companies. Having enough initial capital is very important for a company to be able to initiate and follow through on its objectives. Having access to capital on an ongoing basis is also important because business is unpredictable especially for small companies that must constantly juggle their finances.  

So small businesses must meet the challenge of constantly locating new source of capital in order to fulfill their business plans and remain competitive.  However locating capital is not always easy for a small business. The regular channels like banks and other traditional lenders often set bars too high for them to meet. Investors will want to have too much control or also make demands that are heavy handed, and may want too much for their money. For this reason small business must look to other sources that can help.

Here are a few options for small businesses who are seeking needed capital for their businesses.

Money for Doing Research and Development

Does your business have a focus on research and development or should it have in order to be more successful? Investing in research and development is a way for any company to get ahead of the competition. It is proven that companies that dedicate a good percentage of their finances towards R&D are more successful  

Most companies feel that an investment of this type is expensive and risky when in fact it can actually pay off. Companies like Canada have government agencies that assist companies with their R&D efforts. In fact Canada has a program called SR&ED for Scientific Research and Experimental Development that provides a tax incentive for companies that are investing in their own R&D. This is a way to get money that you would normally pay to the government back into your company to spend on making your business profitable. The best part about the program is that there are private companies will pay you money immediately after you are approved as an advance against your tax credits. This SR&ED financing can come into your company nearly immediately supplying you with a fast and ready source of financing.

Government Grants and Loans

There are government grants available for nearly any types of business today. Everything from farming to software has a government organization designed to promote it and they have a focus on assisting businesses to be successful. If your business employees a certain number of people or the business sector you are in is one your state, province or city is promoting, chances are they will be offering free money to you to help make you succeed. Check on government websites in your area to see what program are available. Chances are you will have to fill out lots of paperwork and take some interviews, and that the process will not be fast. But odds are also that you will not have to give any guarantees for the money, it might even be free, and they will also offer consulting services to make sure that you are on the track to a profitable business.

Friends and Family

Many small businesses get their first investments from friends and family. These are the first believers and they will often provide the capital on great terms that can be modified if things do not go as planned. So if you are starting a business this should be a primary source for you. But also if you have been in business and things are going ok or turning around you should go back to this group and ask for funding. Now that your business is up and running and has a history it may be easier to get money from this group and even from those who told you no initially. So put together a business plan and talk with this group again. You might find success you never considered.

Taking alternative routes to financing can be a smart way for you to get needed cash for your business.