Financing business starts in Uganda

Every business from its commencement and through its development and growth will need finance. The problem often based by every businessman and woman is on deciding what type of finance is best suited to the development of his or her business, and who they should approach for finance. This article provides some generic advice on types of finance available and outlines the planning required before approaching any lending institution.googlea4d4458564b71066.htmlThe first issue to consider is whether the finance required. If indeed finance is required, consider what it will entail. Additional funding requires a commitment in terms of capital and interest payments. Embarking on this course of action must therefore be planned carefully. The business must be capable of sustaining any additional commitment to growth or expansion, and consideration will need to be given to effects on manpower, materials and space.The second issue is considering the various sources of finance. Before seeking outside finance, a business must consider whether it could improve its working capital from within. Particular attention should be given to stock and debtors to ensure that both are kept to a minimum. Consider how long it takes to bill customers and collect debts and look at ways to reduce this time.Assuming external funding is necessary, planning is essential in achieving success. A well drawn up business plan is essential to enable you set out clearly the nature of the project you want to finance and the timing of the required financing.A business plan is also key requirement for to any lending financial institution. Banks are unlikely to provide any financial assistance without a properly drawn up business plan. A well thought out and drawn business plan should include the objectives and aims of the business, the purpose of the required funding, the business ownership and history, management and responsibilities, products and market share, sales plan and strategy, the financial position of the business with detailed cash flow forecasts and past accounts. Business finance is available in many forms, but it is important to make sure that it is right for your business. The most common sources of business finance is bank overdrafts, medium to long term loans and mortgages, but rates of interest can vary considerably. Whatever form of finance is offered, the lender will always require some form of security. However the level of security sought may vary depending on a number of factors such as, the amounts required, the nature of the business, the risk exposure to the lender and the period for which finance is required. Other methods of finance that specifically relate to acquiring capital assets for the business include leasing assets, hire purchase or outright purchases. Each method of funding has its own tax advantages and disadvantages. Typical tax issues to consider when evaluating difference business financing options include – whether the finance arranging costs are tax deductible, whether the interest expense will be tax deductible, and whether they are any withholding tax implications which both parties need to be aware of. It is for this reason that every business should always consult their tax advisers before they commit to any business financing arrangements, so as to ensure that all tax implications of the proposed financing are fully considered and if necessary provided for in the loan agreements accordingly.