Financing A Small Business Does Not Have To Be Complicated .......

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 comes 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.

Grants 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.

by: asbservices9

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