The Importance of Access to Capital

By Yhordan Serpentini

In the last few weeks, we have discussed multiple times about the importance of business funding, financing, and budget plans. One of the key things small business owners must understand about entrepreneurship is that it will suck up a lot of money to start a business, but it is equally as difficult to keep the revenue flowing. This is where access to capital comes in.

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What Is Access To Capital

Before we actually list the reasons, you should also be aware of what access to capital even means. In a quick summary, access to capital is the difficulty with which you can access resources or finances to support your business. It is the most crucial part that any entrepreneur must be aware of because it is essentially the circulation that fuels your business, especially when starting small. Just as blood keeps our bodies running, access to capital will keep your business alive and healthy.

How To Access Capital

Accessing capital is something that you should very well be aware of, not only of the risks but also of how to maintain it. For small businesses, accessing capital is almost always going to come from a loan, most commonly a banking loan. One thing people confuse about debts and loans is that they are always bad; that isn’t necessarily the case. Having a loan can be beneficial, as it increases your credit score and allows for more opportunities to control and improve your finances.

The problem isn’t the loan itself, but the person taking the loan. If you do not have basic financial discipline, any and every loan will negatively affect you. This is why it is crucial you understand adequate financing before you get a loan, as well as before you even start a business because the future of your million-dollar idea rests on it.

There are also multiple sources when accessing capital, such as microloans, commercial loans or commercial lending, funding from friends and family or from your own investments, private equities like venture capital, or angel investors. Again, before taking any capital, you should research as much as you can about them—it is always good to know what you’re getting yourself into, and to prepare for it as well.

Benefits of Access To Capital

There are plenty of benefits to having access to capital, some of which include:

Maintaining operating expenses
Ability for expansion
Preparation for unexpected expenses
Improved business credit score

We also have recently added a new Funding page on our website if you’re interested in learning about our Business Credit & Success Program.

The Importance of Access to Capital