Businesses at times may get stuck in their projects especially when they lack working capital. At such a point as this, the investments they have already made in the stalled project are usually immense. Most may choose to abandon the projects altogether. This is not a good approach to handling such a scenario. Bearing in mind that the abandonment of the project will amount to losses of the invested funds and any benefits that would have arisen at the end of the project are also foregone.
The best approach to go around such a scenario is to evaluate how much capital is needed to successfully complete the project. All the costs such as the labor and inputs costs ought to be factored in before the final project cost estimate can be arrived at. Once there is an estimate in place, the key decision makers may opt to finance the project in a number of ways as we shall discuss.
First, they can choose the option of going for working capital loans. These loans may be given by individuals, banks or other financial institutions that are regulated by the central bank to offer lending of this kind. This process is usually the easiest since all that the financiers will require is a financial statement of the business that is seeking to be financed and a background report of the directors of the said businesses.
Loans for businesses sought in this way may be guaranteed or unsecured business loans. The guaranteed types of loans will require the business to avail a security for the loan which may be recovered in case the business fails to raise the agreed repayment amounts. Unsecured business loans, on the other hand, are given based on the trust that the financed business will be able to meet its obligations and thus repay the loans. Know how to get a business loan here!
The other option to consider is to do a contribution towards the completion of the project. In this scenario, all the directors to a business may convene a meeting and agree to chip in certain amounts of money that may go into the completion of the project that is already stalled. The agreement will be that the repayment of the individual contributors will be done once the project is finished and the payment of the same has been made. In addition, interest may be given on the contributions that have been given.