Financing & Funding
Explore a variety of funding alternatives, including self-funding, angel funding, venture capital, grants, conventional loans, and special loan programs spsecifically for small businesses.
Startup Business Financing -- Finding Funding for Your New Small Business
We'd all love to have a few million dollars to start our business, but the reality is that for most entrepreneurs, you have to prove your concept first before anyone will put up that kind of money. But most businesses require some sort of initial capital for things like inventory, marketing, physical facilities, etc. If you don't have the money yourself that you need to open your doors for business, here are some options to explore.
We'd all love to have a few million dollars to start our business, but the reality is that for most entrepreneurs, you have to prove your concept first before anyone will put up that kind of money. But most businesses require some sort of initial capital for things like inventory, marketing, physical facilities, etc. If you don't have the money yourself that you need to open your doors for business, here are some options to explore.
Equity Financing - Is It Right for Your Small Business?
There are a few different ways to raise funds for your startup. The traditional path is debt financing, which involves taking on a bank loan or private loan. A different approach is to seek equity financing by issuing stock in your company. In essence, this option allows you to sell shares of your company to investors, injecting your business with cash and leaving the investor with the chance to make a high return.
There are a few different ways to raise funds for your startup. The traditional path is debt financing, which involves taking on a bank loan or private loan. A different approach is to seek equity financing by issuing stock in your company. In essence, this option allows you to sell shares of your company to investors, injecting your business with cash and leaving the investor with the chance to make a high return.
Debt Financing - Pros and Cons
Debt is borrowing money from an outside source with the promise to return the principal, in addition to an agreed-upon level of interest. Although the term tends to have a negative connotation, startup companies often turn to debt to finance their operations. In fact, even the healthiest of corporate balance sheets will include some level of debt. The most popular source for debt financing is the bank, but debt can also be issued by a private company or even a friend or family member.
Debt is borrowing money from an outside source with the promise to return the principal, in addition to an agreed-upon level of interest. Although the term tends to have a negative connotation, startup companies often turn to debt to finance their operations. In fact, even the healthiest of corporate balance sheets will include some level of debt. The most popular source for debt financing is the bank, but debt can also be issued by a private company or even a friend or family member.
Before You Apply for a Business Loan
A bank or government agency (such as the U.S. Small Business Administration) are two common sources of funding for your startup venture. If you go that route, here’s a checklist of the things you’ll need to do and think about to prepare for the application process.
A bank or government agency (such as the U.S. Small Business Administration) are two common sources of funding for your startup venture. If you go that route, here’s a checklist of the things you’ll need to do and think about to prepare for the application process.
Private Lending as Alternative Funding: Where Do Entrepreneurs Go When the Bank Says "No"?
It happens everyday. Well-prepared entrepreneurs are walking into the banks with brilliant business ideas with well developed business plans — and are walking out empty-handed. For individuals who do not want to give up a certain percentage ownership in the business as is often required by venture capitalist and deal with the angel investors who may demand a board position or significant day-to-day control, the private lender may be an alternative worth considering.
It happens everyday. Well-prepared entrepreneurs are walking into the banks with brilliant business ideas with well developed business plans — and are walking out empty-handed. For individuals who do not want to give up a certain percentage ownership in the business as is often required by venture capitalist and deal with the angel investors who may demand a board position or significant day-to-day control, the private lender may be an alternative worth considering.
Building Business Credit
Bank loans and personal capital are common ways of securing funds or developing business credit in the early stages, but your vendors are another possibility, and can offer reasonable terms.
Bank loans and personal capital are common ways of securing funds or developing business credit in the early stages, but your vendors are another possibility, and can offer reasonable terms.
Business Equipment Leasing
Building a business from scratch is expensive. If your start-up is particularly capital-intensive from the get-go, or could require frequent equipment upgrades down the road, you may want to consider leasing certain equipment.
Building a business from scratch is expensive. If your start-up is particularly capital-intensive from the get-go, or could require frequent equipment upgrades down the road, you may want to consider leasing certain equipment.
Presenting Small Business Financial Statements to a Lender
Business owners who present their financial statements to a lender will usually present a full set of financial statements to the lender. These include a recent balance sheet, a profit and loss statement, a statement of cash flows, and notes to the financial statements. The statements, prepared in accordance with generally accepted accounting principles, usually give a realistic picture of the business activity for the period in question.
Business owners who present their financial statements to a lender will usually present a full set of financial statements to the lender. These include a recent balance sheet, a profit and loss statement, a statement of cash flows, and notes to the financial statements. The statements, prepared in accordance with generally accepted accounting principles, usually give a realistic picture of the business activity for the period in question.
Due Diligence Is No Mystery
When getting funded, the due diligence process can be excruciating for the business. But if you know what to expect, it will be far less painful. Venture capitalist Ziad Abdelnour of Blackhawk Partners recently sent the following letter out to his list explaining their due diligence process in more detail. While each investment group may have its own variations, this offers tremendous insight from an investor's perspective.
When getting funded, the due diligence process can be excruciating for the business. But if you know what to expect, it will be far less painful. Venture capitalist Ziad Abdelnour of Blackhawk Partners recently sent the following letter out to his list explaining their due diligence process in more detail. While each investment group may have its own variations, this offers tremendous insight from an investor's perspective.
2004 Capital Strategy and U.S. Economic Trends
After three years of general recession in the U.S., and of investors wary of the stock market and private investment, the country has begun a slow and steady recovery. First signs appeared mid-2003, and have held their course into the first quarter of 2004. We can see this early recovery in the new movement of capital from corporate, venture and private sources.
After three years of general recession in the U.S., and of investors wary of the stock market and private investment, the country has begun a slow and steady recovery. First signs appeared mid-2003, and have held their course into the first quarter of 2004. We can see this early recovery in the new movement of capital from corporate, venture and private sources.
Finding Startup Money
Our Small Business: Canada Guide discusses the ins and outs of getting initial funding for your startup.
Our Small Business: Canada Guide discusses the ins and outs of getting initial funding for your startup.
Angel Investing: Changing Strategies During Volatile Times
This working paper from the Center for Venture Research explores recent statistics of angel activity during the rapid run-up of venture investing and its post-bubble decline.
This working paper from the Center for Venture Research explores recent statistics of angel activity during the rapid run-up of venture investing and its post-bubble decline.
Bootstrapping Your Start-Up
Venture Capital funding has largely dried up these days, and the fact is that despite dreams of angel investors, most business owners build their business with their own funds. There are a variety of techniques for self-financing explored here.
Venture Capital funding has largely dried up these days, and the fact is that despite dreams of angel investors, most business owners build their business with their own funds. There are a variety of techniques for self-financing explored here.
Second Round Funding
The initial start-up is often financed out of entrepreneurs' own pockets or by friends and family. When you're ready to move beyond that stage and need funding, you may find traditional lending institutions unwilling to provide financing. Here are some other ideas for creating credit for your business without turning to venture capital.
The initial start-up is often financed out of entrepreneurs' own pockets or by friends and family. When you're ready to move beyond that stage and need funding, you may find traditional lending institutions unwilling to provide financing. Here are some other ideas for creating credit for your business without turning to venture capital.
SBA Loan Information
Learn the factors that are considered for an SBA loan and the procedure for applying for an SBA Guaranteed Loan.
Learn the factors that are considered for an SBA loan and the procedure for applying for an SBA Guaranteed Loan.
SBA Microloan Participants
Find a participating SBA Microloan Lender in your area.
Find a participating SBA Microloan Lender in your area.