Getting Finance For Telecommunication Business
A telecom business is the one that offers telecommunications services to its customer base. It thrives on the factors like the acquisition of new customers and also the retention of old customers. For businesses in the telecom industry, it is very important to have a flow of regular income through its customer base. Any business in the telecom industry involves an investment that is perhaps very huge and the investment is also subject to a whole lot of risk. In the article to follow, we are going through an understanding of what are the financing options that are available to any business in the telecommunications sector and what should be done to get funds to start up a business in the telecommunications domain.
It is the first and the foremost thing to be done when you are about to approach your financers for any funds for your telecom business. Planning for the development of a business model is very difficult and not at all easy to understand and forecast. It is not a grocery market business that you are going to start that your business model is simple and it is easy to explain for the bodies that are going to fund your telecom company. A telecom business is such that your financers can easily consider the option of not funding your project or your business or project so that you are still looking for the financers in the market. The traditional lenders that give loans and various lines of credit for interest rates are such that they just do not understand the complexities of a telecommunications business model and they still look for clarity in the explanation and the forecasting that is done when your telecom business is funded.
Funding for an MNC
If you are a company which has presence in many countries in this world, then perhaps it is easy to get funding for you because of the amount of revenue that is generated from the customers from the subscription of the revenue of your services. But, on the other end it is very difficult for you to get your project financed owing to you being a small business in telecom domain and the investors are not sue if your business plan is able to sustain the competition from the various big players in the market. A bank also would not prefer to loan some amount of money for your business owing to the amount of receivables which are small in amount that are received in small telecom business. In this case, the repayments of loans are also done in very small amounts. It is seen that in telecom, when the services are delivered to the customers it is such a time that is elapsed that it takes almost a month and a half for your receivables to get delivered in the form of capital to you. Due to this slow natured of deliverables, the financers are skeptical about you paying back the relevant amounts in time. These are the issues in the billing that are specific to the telecom industry. Hence your financers will probably choose in dealing with businesses that are more of a traditional one in nature.
Consider the option of ?factoring?
An option called as ?factoring? is available in the market which is such that it allows the business owners to obtain some credit from the lenders such that the loan is taken against the receivables of the company. But there is a pitfall for the clients who receive money as funding in the form of ?factoring?. This is because the money that is available to various businesses, especially the ones in the telecommunications sector are such that they always come with the interest rates that are very high and hence very difficult to be paid back. It is your receivables that are at stake for the loan amount that you borrow as collateral. You need to find a financer or a company that has provided finance to the company to start up a business in the telecommunications sector. In this way, you can get the cheaper rates for your loans which are of this nature. This is because those type of money lenders have an understanding a risk that such kind of investment is subject to.
Solutions that are asset based
You perhaps can also consider going for loans that are based on your assets like the contracts that exist in your current line of business, and also the other assets in the form of collateral for the funding that you acquire from these companies. This can be a good option that you can consider while seeking for funds especially if you have large number of assets such as telecom equipment and also the large number of contracts that is signed on behalf of your company. A business in telecom that is small seldom has assets for these types of funding.
Thus in this article, we have seen various aspects of acquiring funds for the telecom business for starting a business in telecom.
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