Financing And Having Your Own Small Business

Financing a small business does not have to be complicated, as
there are a number of resources that can help you along the
way, as well as numerous financial and government institutions
that cater to those wishing to finance a small business.

 

In terms of financing there are several things that need to be
examined; do you need working capital or can you use existing
cash flow for the small business? How urgent is your need for
financing and what are your risks? What will the capital be
used for and what industry does the small business operate
under? There are an exhaustive amount of questions that need to
be answered when it comes to financing a small business.

 

Realize that there are two different types of financing; equity
financing and debt financing. Equity financing is looked at as
the amount of equity to debt ratio that you have in the
business. The biggest resource of equity financing comes from
venture capitalists. A venture capitalist is generally a
financial wizard with a lot of money to invest. They prefer to
invest in businesses that are 3 to 5 years old that look
promising and are able to offer a big return on the initial
investment.

 

Debt financing can be obtained through banks, credit unions,
lending companies and other financial institutions that offer
services to small business owners.

 

The government, both on the federal and local level, also has
numerous programs in place to assist people in securing
financing for small business.

 

One of the most common places to look for financing
opportunities is with the United States Small Business
Administration. This entity has a number of programs in place,
including special financing programs for women, veterans and
Native Americans who wish to secure funds for a small business.
The U.S. Small Business Administration has a comprehensive
website that explains in detail all of their available
financing programs.

 

Another source of funds for small businesses come in the form
of grants. A grant is an award of money that does not have to
be repaid. Many times, grants come with stipulations on how the
funds can be used, but there do exist many grants that are
available for the sole purpose of starting up a small business.

 

rants are available from a number of sources including the
federal government, private organizations and individuals, and
local initiatives that may be offered in your local area. Some
of the different entities that award grants include the Small
Business Administration, the Department of Veterans Affairs,
and the National Science Foundation, just to name a few.

 

If you are just starting up your business and have already
invested a significant amount of your personal funds, you are
more apt to qualify for a small business loan through a
commercial lender. Before using debt financing to fund a small
business, it is wise to first exhaust all other avenues.
Business associates, friends and family members may be willing
to invest a bit of money if you are able to provide them with a
sound business plan and the potential for a healthy return on
their investment.

 

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