Sources Of Business Financing Apart From Bank Loans

A certain amount of money is required to start or run any business

. The entrepreneur has to work out where the threshold of starting a new venture is and what are his or her possible options to get access to funds sufficient for the requirements. The startup owner has to look over the investment that is eventually a break down into debt and equity forms. A debt is the sum of money you borrow from a lender and the payment of it involves interest on that investment along with the capital sum borrowed. This procedure of payment is stretched over certain time period .On the other hand an equity investment is the one which involves selling a portion of the company in return for cash or something else of value to an investor.

When it comes to business financing the first thing that comes to mind are bank loans. Although only a few fortunate can fulfill all the pre-requisites for a bank loan and are successful in acquiring such funds. One of the first organizations to be approached is almost always banks for funding as loans. Successful loan application for any one there are many that get rejected. The harsh reality as this is soon learned by the entrepreneur that it is actually not easy to finance the business form such loans by bank.

With banks realizing the phenomenal potential of small businesses funding the bank loans are gradually undergoing a change in the previous hard regulations obligatory to them. To woo small businesses even big banks have got the additional services and special programs launched. There are many businesses that dont prefer a bank loan for startup funding. A report of a survey shows that, less than 15% of start-up capital is what such bank funds are comprised of. This percentage may go up to 40 % also for companies not more than 20 employees.

Well this does not states that bank funding is not good and you should not opt for it but also it is not the only source for business financing. Get money from individuals or groups of individuals is often easier option for start ups. And for companies which have a successful track record of are likely to find more investor, lenders and institutional lenders even for small organizations too.

Private small business funding companies who provide both secured and unsecured business loans, angel investors, venture capitalists, grants, are also some other sources and alternatives to bank financing loans. Before opting for any a proper balance between the advantages and disadvantages should be analyzed to make any option more beneficial for your business.

by: Bernie Lemieux

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