There are many ways you can get the capital you need to expand or develop your business. A line of credit or bank loan is the most popular way to finance a small business. Due to the economic difficulties, banks are not able to provide conventional business loans. The risks involved in granting a new loan to a business are very high. Many people turn to the Small Business Administration to get a guarantee for this type of financing. SBA can often provide a guarantee up to 80% on any credit facility. You will still need the right collateral and credit score to obtain financing through this method Small Business Funding.
The second most popular type of funding is the use of funds from family members, friends, or angel investors. Private investors may offer capital in return for a share of your business. When dealing with family and friends, it is important to exercise caution. You should always conduct capital raising transactions in an arms-length manner. Your certified public accountant and angel investors should work together to determine the fair share of your business that you want to sell to them. When you work with venture capitalists or angel investors, a CPA can help you to determine the value of your business.
There are many ways to get the capital you need. Each funding option has its own strengths and weaknesses. You won't have to sell any of your business to third parties if you are using debt capital. However, you will need to pay substantial monthly interest and principal repayment. Equity capital will require you to sell a part of your business to investors who could take over your business if your plan is not executed properly. When deciding which capital type is right for you, it's important to consider all these factors.