Ugandan entrepreneurs and business firms are always tasked with finding affordable and reliable sources of capital/financing. Today, Africa Nxt Gen explores some financing options for the entrepreneurs and the current providers.
Invoice Discounting
In this option, if one has already been issued a purchase order and they’ve managed to invoice for the same, they can then seek an invoice discounting facility from the bank. That means, one uses the invoice as collateral upon which to seek a loan from the bank for an equivalent amount. Most banks allow this on condition that the invoice payment will go through the same bank. In Uganda, the most popular bank offering this facility is Citibank.
2.Bank OverdraftThis option allows one to withdraw over and above their available balance. Depending on the trust one has established with their bank, most banks will offer this facility especially for businesses with guaranteed cash flows. Among the banks offering this include Diamond Trust Bank, Centenary Bank, Equity Bank and Stanbic bank.
3.Share CapitalAt Africa Nxt Gen, we advise entrepreneurs to consider selling out a stake of their equity for a fee. Instead of holding 80% shares, part of these could be sold and used to raise equity. Finding people looking for potential businesses and making a case to them. One can these do a share revision with the Uganda Registration Services Bureau. Important to also account for costs for these changes and charge them accordingly to the new equity owners.
4.Angel InvestmentAlthough not very common in Uganda, but this is for companies at the early stages. Those seeking seed financing. Over the years several Angel Investment networks have popped up in Uganda. These include Uganda Business Angel Network and Kampala Angel Investment network.
5.CrowdfundingWhy not throw your idea to the public and ask them to back it with money? Platforms such as Akkabo Uganda provide crowdfunding options. One can also try Gofund me account although there could be complexities with opening an account while based in Uganda.
6.Letters of CreditBack to one’s relationship with their bank, one can get a facility for the bank to guarantee payment of supplier’s bank once goods/equipment are received. The beauty with letters of credit, they are good if one is dealing with new suppliers, and they want banks to guarantee such an arrangement and thus secure it. All Ugandan banks provide this option.
Sources of Capital/Financing in Uganda
Ugandan entrepreneurs and business firms are always tasked with finding affordable and reliable sources of capital/financing. Today, Africa Nxt Gen explores some financing options for the entrepreneurs and the current providers.
Invoice Discounting
In this option, if one has already been issued a purchase order and they’ve managed to invoice for the same, they can then seek an invoice discounting facility from the bank. That means, one uses the invoice as collateral upon which to seek a loan from the bank for an equivalent amount. Most banks allow this on condition that the invoice payment will go through the same bank. In Uganda, the most popular bank offering this facility is Citibank.2. Bank Overdraft This option allows one to withdraw over and above their available balance. Depending on the trust one has established with their bank, most banks will offer this facility especially for businesses with guaranteed cash flows. Among the banks offering this include Diamond Trust Bank, Centenary Bank, Equity Bank and Stanbic bank.
3. Share Capital At Africa Nxt Gen, we advise entrepreneurs to consider selling out a stake of their equity for a fee. Instead of holding 80% shares, part of these could be sold and used to raise equity. Finding people looking for potential businesses and making a case to them. One can these do a share revision with the Uganda Registration Services Bureau. Important to also account for costs for these changes and charge them accordingly to the new equity owners.
4. Angel Investment Although not very common in Uganda, but this is for companies at the early stages. Those seeking seed financing. Over the years several Angel Investment networks have popped up in Uganda. These include Uganda Business Angel Network and Kampala Angel Investment network.
5. Crowdfunding Why not throw your idea to the public and ask them to back it with money? Platforms such as Akkabo Uganda provide crowdfunding options. One can also try Gofund me account although there could be complexities with opening an account while based in Uganda.
6. Letters of Credit Back to one’s relationship with their bank, one can get a facility for the bank to guarantee payment of supplier’s bank once goods/equipment are received. The beauty with letters of credit, they are good if one is dealing with new suppliers, and they want banks to guarantee such an arrangement and thus secure it. All Ugandan banks provide this option.
Other sources of Financing
1. Lines of Credit
2. Loans
3. Public deposit funds e.g Emyooga
4. Personal Savings
5. Venture Capital
6. Off-balance sheet financing
7. Social Capital
8. Business Accelerators
9. Trade credit from suppliers
10. Advance payments from Buyers
11. Government bonds and securities
12. Grants
13. Mezzanine Capital
14. Factoring
15. Lease Financing
16. Hire Purchase
17. Private Equity
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