If you're just considering starting a business, you probably want to know how you can finance its operations. You may also look for additional sources of business financing when your business has grown but has also started to consume more expenses. So where can you get additional funds from?
Sources of business financing: division of sources
What are the sources of financing for business activities? It's worth distinguishing two basic ways of financing businesses first. In this case, sources can be divided into internal financing sources (i.e., coming from the company's own resources) and external ones.
In the case of internal financing sources, the situation is simple - as an entrepreneur, you are not dependent on anyone and only spend the funds you have at your disposal. It should be noted that internal financing sources include both your own financial contribution (i.e., funds you decide to invest in the business) and net profit (generated by your company). In addition, depreciation and proceeds from the sale of assets are also considered internal financing sources.
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The vast majority of entrepreneurs sooner or later also reach for external sources of business financing - especially if they want to significantly develop their business. If you decide to make this move, you will have several different sources to choose from.
Grants, credit, factoring. And there are even more possibilities
The most popular external sources of business financing include grants, bank loans, factoring, as well as issuing shares or bonds. A large portion of entrepreneurs primarily focus on grants and loans - mainly due to the fact that obtaining such financing sources is usually much simpler (and available to virtually all entrepreneurs, regardless of the form of business activity).
When it comes to grants, as an entrepreneur, you can apply for grants from EU funds - however, you need to find a program under which you can receive funds. To check what programs are currently available, you can visit the website of new EU grants for 2021-2027, and then select the voivodeship where you conduct your business activity. This will give you access to a list of current competitions and allow you to check what conditions you must meet to receive grants. At the same time, you must remember that not all competitions are directed at entrepreneurs - some of them are open only to public institutions.
Remember: you can also obtain grants from national institutions or investment funds supporting the development of smaller companies.
In addition to grants, bank loans are also very popular, including working capital loans, which aim to finance the company's current operations. Many entrepreneurs also decide at some point to take out an investment loan, which will allow them to purchase additional equipment and machinery, rent or buy a larger premises, or invest funds in more expensive semi-finished products and materials. If you want to develop your business on a larger scale, you'll probably use an investment loan sooner than you think.
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Factoring is also an interesting source of business financing. This form of financing can be useful if your contractors often delay paying the invoices you issue. This way, you'll maintain financial liquidity. By the way, remember that from January 1, 2025, cash-based PIT came into effect - choosing this settlement method allows you to pay income tax only after receiving payment from the contractor.
Source of company financing: how to choose the best one?
Financing for companies doesn't always have to come from the entrepreneur's pocket, although undoubtedly internal financing sources are widely considered safer solutions. If you're just starting your adventure with running a business and don't know yet whether your online store - or any other business - will actually bring profits, opt for your own savings. This way (especially if you don't invest too much at the start), even if the company doesn't bring the profits you expect, you won't be forced to return funds to external entities. It's a different story when your business is thriving and you're ready to take the next step. In such a case, don't be afraid to reach for external financing sources, such as grants, loans, but also factoring or leasing.
