Financing For Business

Sources of finance for your business are equity, debt, retained earnings, term loans, working capital loans, letter of credit, etc. These sources of funds are used in different situations. They are classified based on time period, ownership and control, and their source of generation.

There are only three types of financing available to a small business owner: debt financing, equity financing, or a combination of the two. Debt financing comes from banks (money borrowed from external lenders), government loan programs, or anyone you can convince to lend you money, to be repaid over a period of time with interest. Equity financing is investing your own money, or funds from other stakeholders, in exchange for partial ownership.

Before you start your own business, you need to sit down and write out a business plan that includes plans. Then, you need to decide who to approach and where to go for financing.

There are five ways in which to get financing for your business:

  1. Savings, checking account or credit cards
  2. Friends and family
  3. Angel investors
  4. Crowdfunding
  5. Business loans and lines of credit

If you are thinking about going into business with absolutely no money then here are a few suggestions to consider:

  1. Ask yourself what you can do and get for free
  2. Build up six months’ worth of savings for expenses
  3. Ask your friends and family for extra funds
  4. Apply for a small business loan when you need extra cash
  5. Look to small business grants and local funding opportunities
  6. Find out about—and woo—potential angel investors

Many people believe that they cannot start a business without any money. And that is true to some extent. If you do not have your own money, you either need to take a loan from a bank or you need some strong investors who support your idea.

For assistance in learning even more about financing for your business, contact:

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