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How To Finance A Small Business

 June 10, 2014  /  Comments Off on How To Finance A Small Business

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When it comes to financing your start up, there is a wide variety of options available, from using money from his own pocket to borrow. To determine which financing option is best for your situation, here we analyze 8 possible ways to find support:

  • Traditional bank loans: Most entrepreneurs use banks to finance your business. If you plan to apply for a bank loan, make sure you have a clear description of how the money is spent, as many banks will want to see a solid business plan before approving a loan.
  • Financing the Small Business Administration: The SBA offers flexible loans through agencies and non-government organization for companies that qualify.
  • Credit cards: Almost half of all companies are funded, at least initially, with credit cards and while this might be a good option if you want to move quickly, start mixing your business expenses with personal expenses it might not be careful.
  • Own funding: This requires use their own assets to finance your business. You could refinance your home and borrow money from your savings, investment portfolio or retirement fund. Note that penalties or charges to persons performing certain early withdrawals of retirement funds may apply.

How To Finance A Small Business

  • Family and friends: If your family or friends offer their funds, make sure you sign a contract, determine whether it is a loan or an investment and maintain regular communication with them. Whether it is a loan or an investment, should also accept that there is a financial risk that could cause loss of some or all of their funds.
  • Venture Capitalist: This is a source of financing in which wealthy investors, investment banks and other financial institutions invest in a company or idea they believe has a potential long-term return for a percentage ownership of the company.
  • Joint Finance: A new way to fund development and start-ups. Joint financing occurs when a large group of people donate money in an effort to bring a business idea to the next level.
  • Angel Investors: In general, are wealthy individuals who provide funding for a start-up looking for a high return on investment. Unlike venture capitalists, angel investors can use their own money to finance start-ups they consider potentially profitable.

A thorough research and planning will help you determine which way to go when it comes to financing your new venture.

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  • Published: 3 years ago on June 10, 2014
  • Last Modified: May 19, 2016 @ 7:59 am
  • Filed Under: Business, Finance

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