Effective financial management is essential for every company. But remember, the process doesn’t have to involve only capital raised through revenue. Raising funds also helps improve business results and meet a variety of needs.

However, selecting the best alternatives requires smart thinking, considering the most advantageous options for the corporation. This is because the market offers different means of raising funds, and it’s important to choose the one that best meets the company’s needs.

Read on to discover 6 alternatives for raising corporate funds!

1. Bank loans and financing

Through bank loans and finance, businesses can raise funds in one of the most popular ways. This is because financial institutions are the primary providers of credit for companies, due to the competitive market and the availability of resources.

Loan and financing conditions are determined by various factors. Some examples include interest rates, repayment terms, and loan amounts. Furthermore, the credit evaluation process often consists of the following components:

• the company’s payment capacity;
• net worth of the corporation;
• bank score;
• payment history analysis.

One advantage of bank financing is that it can result in lower financial expenses for the company. Interest rates are usually lower due to the presence of collateral.

On the other hand, unsecured loans tend to be more expensive. After all, this type of loan poses a greater risk to the bank in the event of default.

2. Crowdfunding

The second way to raise capital for companies is through crowdfunding. This model operates through specialized platforms that connect investors with projects seeking financing.

In crowdfunding, investors contribute resources to finance a specific project or become partners in a company . The process is often effective for initiatives that have a strong appeal and can attract the interest of many people.

To launch a crowdfunding campaign, you need to present a detailed proposal. The document should include, for example, the potential return for investors, the fundraising timeframe, and the amount to be raised.

Furthermore, a minimum investment amount is established, allowing multiple investors to participate in the initiative. At the end of the established fundraising period, if the desired amount is reached, the project is launched with the funds raised.

On the other hand, if the target amount isn’t reached, the initiative is terminated. The allocated amount is then returned to investors, according to the rules established at the time the campaign was created.

3. Angel investor

Besides crowdfunding, an innovative way to raise funds for your business is through angel investors. They are often willing to invest in emerging companies during the early stages of development.

At this stage, the capital and support provided by angel investors can be crucial in transforming a promising idea into a viable and successful company. One of the hallmarks of angel investing is that it occurs jointly with other investors, in investment rounds.

This approach allows different people to share the opportunities and risks associated with a growing company. An important aspect to consider when seeking an angel investor is the concept of smart money.

4. FIDC

Using a FIDC (credit rights investment fund) is the fourth method of raising money for the business. Its main objective is to invest in credit rights arising from the advance of trade receivables.

FIDCs are often useful for corporations that have credit claims on future receipts, such as promissory notes, invoices, and credit card installments. These amounts represent guaranteed payments to which the company is entitled, but are scheduled for later dates.

The transaction involving a FIDC occurs through a securitization company , which purchases the company’s receivables by paying a lump sum at a discount on the total amount. Subsequently, the receivables are securitized and made available on the market.

In this method of raising financial resources, the company can advance its payments without committing to debt.

5. Peer-to-peer lending

Another strategy used by businesses to raise money is peer-to-peer lending. The process is facilitated by platforms known as credit fintechs. They connect investors—typically individuals—with borrowers—corporations or individuals.

These platforms facilitate the entire process online, from loan application to fund transfer and necessary documentation. After the borrower makes payment to the platform, the platform transfers the funds to investors, subject to the established terms and conditions.

6. Partners

Finally, the company can also raise funds through its partners . When the company is managed by a partnership, they have the opportunity to contribute financial resources to boost the business.

This alternative can be attractive for several reasons. First, the partners are already involved in the company, which often facilitates negotiation and the fundraising process.

Another advantage is that, by investing in their own corporation, partners demonstrate confidence in the business and its growth potential. This tends to be perceived positively by other investors and stakeholders.

In this scenario, it’s important for the company and its partners to establish clear and transparent agreements regarding the terms of the investment. Some examples include:

• equity participation;
• rights and responsibilities;
• profit distribution;
• decision making.

Therefore, a well-drafted shareholders’ agreement can help avoid future conflicts. This ensures that everyone involved is aligned on the investment’s objectives and expectations.