Credit Options for Your Small Business

Loans, Grants, and Equity Financing

                           

The truth is that bank loans and grants can be difficult for business start ups to obtain. Entrepreneurs can rarely consider funds from these sources as their primary means of funding a new business.

Because the chance of obtaining a loan or grant is so small, small-business owners should only dedicate a small amount of time to pursuing these options. Business success requires allocating time efficiently, and equity financing or small amounts of credit could offer the highest possible return.

Equity financing can be thought of as selling a share of your business to an investor. In exchange for immediate financing, the business owner gives up part of their future profits.

Many small-business owners are reluctant to do this. However, it could be the best option for many businesses. The choice is often thought of as allowing the owner to gain a smaller percentage of a larger amount of profit, if the equity financing helps the business to grow.

Small credit lines may be available from vendors and suppliers that you work with. Loans may also be available from friends and family, and these loans are actually among the most common sources of financing for small businesses.

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