Capital financing for a small business is a very difficult process. This is because capital for small businesses is extremely constrained due to the tough economy. As such angel investors, venture capital firms and private equity groups and related funding sources are reluctant to provide financing to small businesses that may not see a significant return on their investment. Therefore, it is imperative for you to show a private funding source that your business is capable of generating a significant return on investment as this is the funding they are pouring into your business. This will be a topic we will continue to discuss as it relates to your ability to grow your business through capital investment.
There are a number of ways you can get capital for your small business. First and foremost, you can apply for a small business loan, which gives you the ability to start or expand your business without having to sell any part of your business to a third party. Many sole proprietorships are happy to borrow because the covenants give them a lot of flexibility in terms of their business investments. For this reason, we strongly encourage you to continue working with a small business advisor as it affects your ability to potentially obtain a strong equity investment from a bank that is willing to lend on an ongoing basis against your company’s assets as your business expands.
In conclusion, equity financing for a small business can come in a variety of forms. We strongly encourage you to work with your accountant and a lawyer as this will affect your ability to effectively obtain the financing you need to develop and grow your business. These professionals can provide you with the expertise needed to make a decision on the most commercially viable financing model required for your business. Of course, as an entrepreneur, you need to make an informed decision when it comes to acquiring the business capital you need to run your business. In many of our future discussions, we will continue to discuss the issues that arise from finding capital financing for a small business and will focus on how many of you will need ongoing subsequent rounds of capital.