Loans and Financing

When starting a small business (or any size business for that matter), the majority of business owners will need to secure capital to get their businesses up and running and to keep them running. Often, potential business owners will secure capital through business loans. A number of loans are available to help people start businesses, from start-up loans to lines of credit to term loans.
 
In addition, people may consider turning to family and friends to secure money to invest in the business. Business owners might even consider equity finance, in which they exchange a stake in the business for financial contribution.
 
Before applying for a loan or exploring other avenues of business financing, it is important to carefully examine the pros and cons of each financing option to make sure you choose the one that works best for you and your business.

Business Loans

Business loans exist to help business owners finance a number of costs, from start-up costs to costs of acquisition to the cost of equipment. Though a number of business loans are available to business owners, people should consider several factors before choosing a business loan, including the amount of money they need, the repayment terms and the qualification requirements for the business loans.

Small Business Loans

Small business loans are available to help owners of small businesses finance a variety of expenses. Lines of credit, term loans, Small Business Administration guarantees and working capital loans are all common small business loans.

Start-Up Loans

Start-up loans help business owners gain the capital necessary to finance a new business. On average, business owners can get anywhere from $5,000 to $50,000 worth of capital with start-up loans. Start-up loans give small business owners not only the ability to open their business but also to keep it running. Business owners should investigate the associated risks before applying for a start-up loan.

Small Business Finance

Starting a small business often requires a significant amount of capital. Luckily, a number of finance options are available to those looking to finance their small businesses. Bank loans, lines of credit, family and friends and personal savings are all small business finance options. So-called angel investors also can help with small business finance.

Raising Capital

When starting a small business, adequate funding is of the utmost importance. When business owners are looking to raise capital, they often turn to debt fiancé or equity finance. Debt finance is obtaining a loan from a bank or a financial institution. Equity finance is exchanging a stake in your business for financial contribution. The way in which you decide to raise capital for your business will largely depend on the nature of your small business.

Resources

Sba.gov (n.d.). Home Page. Retrieved March 5, 2008, from the SBA Web site: http://www.sba.gov.