Want to start financing your small business, but don’t know where to start? Here’s some key terms to have in your toolkit and 3 general ways to get started.
What is Business Financing?
Before you begin financing your business you must decide how much startup funding you will need. Successfully financing your business begins with an understanding of your company’s needs and a commitment to the financial future of your small business.
Here are key terms to understand when it comes to business financing:
- Debt Financing – funding most commonly offered by a financial institution in the form of a loan requiring regular payments.
- Equity Financing – funding offered in the form of an investment made by an individual who possesses a percentage of your business as a result of their investment.
- Venture Capital – funding given by investors to start your business in exchange for a shared portion of the company and an active role in the business.
- Mezzanine Capital – a combination of debt and equity financing with the possibility of a conversion of your unpaid loans (debt) into lender ownership (equity interest) by the lending institution.
So, how do I get started?
Now that you understand your company’s needs and the different types of financing and capital, you can decide on your funding.
Here’s three basic options:
- Self-Funding (family/friends, savings, 401(k), etc.)
- Investors (here’s where you can get venture capital!)
- Loans (debt financing)
Deciding how and when to begin funding your new business can be a challenge and can be impacted by several factors. Business financing, while challenging, can be extremely rewarding when approached carefully and maintained intentionally.
Need more help getting started with financing? Talk with a banker or contact us today at 800.526.9127 or visit our website at https://republicebank.com/business/grow-your-business.