Financing Small Business

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Resources For Financing A Small Business

financing small business

The most critical factor for success is finding the right resource when it comes to financing a small business. There are a host of ways to find funding, depending of course on the credit rating of your business and your standing in the market. Often business owners are not aware of all the types of small business funding that is available; however, with a little research, you will find that you can choose from different types of loans for small business.

The first option most small business owners choose is to look for small loans among friends and family. This is known as boot strapping your business. Often, a deal is struck among the owner of the business with friends or family members for a loan that can be repaid over a much longer period of time than they could hope from a commercial lender. Each person who lends money now owns a share of the business, and will be paid small amounts out of the business’ profits every month or every quarter.

The owner will often pass on taking a salary for himself in favor of repaying his investors first. This will also make a business owner look good when he does go for commercial financing, because having private funds at risk shows lenders that he is committed to the business succeeding.

Another method of financing a business is called equity financing. This means that additional equity will be coming from outside investors like industry associates, customers or even employees. The majority of equity financing available on the market today comes from what is known as venture capitalists. These are groups of investors and government assisted sources of funding that are devoted to assisting businesses meet their financial needs so that they can succeed.

When it comes to a venture capitalist financing a business, they may take on a startup that looks promising, but they often prefer to deal with businesses that have been around at least 3 years before they take a risk on them.

The most common method of financing a business is called debt financing. This method usually involves applying for commercial financing through banks, credit unions, commercial finance companies, and even going to the Small Business Administration for financial advice.

Banks are often hesitant to offer long-term loans to small businesses, but the SBA has guaranteed several lending programs to encourage banks and other lenders to rethink that policy. With the Small Business Administration guaranteeing that the loan will be repaid, most banks and other lenders will go ahead with the bank loan, as long as the business credit history is stable.

We at Sun South Equipment Leasing are dedicated to helping businesses grow and thrive. If you don’t have the capital available for the equipment you need, talk to us about any of our easy financing options today.