How To Finance A Business

Getting money for your company does not have to be a complicated procedure. If you have all of the basics in place, including a business plan, tax and business identification numbers, business bank account and other basic fundamentals, then you are ready to pick the type of financing you want to seek.

For most small businesses just getting started it can seem like an uphill battle. Unless you use your personal credit to back a loan many lenders baulk at helping to finance a business just starting out. There are ways to increase your chances even at the beginning. First have a killer business plan set up, then look for ways to improve your cash flow without loans. Business credit cards and vendor accounts are a great way to do that.

You can also look for private financing from vendor capitalists. If your business idea is something that might boom and take off fast many will be anxious to back you in exchange for a percentage of ownership rather than traditional loan payments. The great part about vendor capital is that you don’t have any monthly payments and you don’t incur interest. If the business doesn’t do as well as hoped or even if it fails, you don’t owe anyone anything. That’s part of the risk of venture capital and why those types of lenders look for unique and inventive ideas that will likely burst out onto the scene.

The downside to venture capital is that you will then have a business partner. In some cases they are silent partners that won’t interfere with your business. In others you may want them to help out, especially if they have contacts and experience in your field. You also have to pay them their percentage of the businesses profits until the day you close the business or they sell their percentage back to you. If you decide to go with venture capital don’t ask for a small loan. You will be paying for it for the life of your business, so make it worth the money you will be spending in the long run.