Funding Sources

If you want to start or expand your business, you need to consider what funding sources to use. There are a number of funding sources available for your business that will allow you to expand or to hire new employees. Ups and downs in your sales can lead you to struggle with your cash flow, which can cause a number of problems for your business if you do not get it fixed quickly. Here are some of the common funding sources to consider:

• Banks

• Credit Unions

• Angel Investors

• Venture capitalist

Banks are going to be the hardest lender to work with as they have strict rules pertaining to small business lending. They will scrutinize your business credit heavily as they are trying to understand what type of debt you have taken on in the past and how you have managed it. Depending upon the amount of financing you need and the length of time you have been in business, you may also need to deal with your personal credit issues to gain financing. Your best option is to try and separate your personal and business finances as it can cause problems for your personal situation.

Credit unions are easier to work with, especially if you already have an account with them. If they manage your personal bank account and you have had a good experience with them, consider applying for additional funds for your business. As long as you have a good track record. They usually will provide you with a personal line of credit or a small business line of credit.

Angel investors are another great option but they usually only work with companies that have been in business for at least 2 years. Angel investors look for companies that have been successful and will continue to be successful for many years to come. Some of your close friends may be involved with angel investors and they can point you in the right direction as you are searching for investors.

Venture capitalists also provide funding sources for your small business. A venture capitalist is similar to angel investors except they will actually own a part of the company. This allows them to make decisions pertaining to your business. You will need to give up some of the control of your small business, which can be a challenge for a lot of small business owners that are used to full control over their business.