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Raising the financing for your small business 101Raising the financing for your small business 101. As you venture into the world of small business financing, you will find there are several different options you can look into. Though, each of these options has some positives and negatives that may make one options more appealing than the other. In order to raise the needed funds for your small business, you will need to look at what you have to offer to your own business. This can be in the form of good credit, equity in a home, tools, a great business plan, or family and friends who have money and who will trust you with that money.
There are a couple different ways that funding is usually available for a small business. These two options would be the use of a loan, either personal or small business. Or, you can get investors to purchase parts of the small business for a certain amount of money that can be used in the funding of the business. The thing about both of these options is that you have some good things that come from them and some not so good things. Here are some pros and cons of both getting a small business loan, and getting investors to finance your business. Whether you borrow the money from a friend or family member, there are a few pros and cons to look at. Pros Family and friends will likely give you a lower interest rate Cons They will want controlling power in the company. If you get a loan from a professional lender or bank, you will also have several pros and cons. Pros The banks have different reasons to loan people money. Cons You have less negotiation power. If you stay away from loans and get investors to join you in the adventure of your small business, then there will be pros and cons with this also. Pros This is one of the most practical choices for starting a business. The reason is that you do not have a huge financial debt right off the bat. Cons They want controlling decisions in the business. With any option you go with, keep in mind that you will still have some legal and ethical responsibility. There is also going to be a good deal of paperwork for no matter what choice you go with. The ultimate option would be to use your own money. However, this is not the choice that many have right at the time of starting a small business. Therefore, it will be up to you to choose what is going to be your best option for financing for your small business. |
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