Funding your business
Once you’ve completed your business plan, you’ll have identified your short-term and long-term financing needs. The next step is to secure funding.
There are a variety of start-up funding options available, we recommend researching each of them carefully.
The cost and consequences of your funding decision can be dramatically different.
| Debt financing | Taking out loans, using credit cards and securing lines of credit fall in this category. The National Federation of Independent Businesses present the pro and con of this option simply: This type of financing is not dependent on whether your business succeeds or not. If your business is successful, you are responsible for paying back your loan but you keep all the profits and control of your company. |
| Equity financing | If you want to tie your funding to the success of the company, you can sell some of your ownership to secure funds. Your risk is lower if the venture doesn’t work, but you must share ownership and profits. |
| Grants | Federal, state and local governments offer a wide range of financing programs to help small businesses start and grow their operations. To find out more check with the Small Business Innovation Research Program of the SBA. |
| Venture capital | Venture capital is a type of equity financing that addresses the funding needs of entrepreneurial companies that cannot seek capital from more traditional sources. To find an investor, check out the Small Business Investment Company Program. |