Don't believe late-night TV commercials. No one is giving away grants to business startups. The money folks expect to be repaid, one way or another, either through loan repayments or in dividends from company profits or proceeds when the company sells.
And even seasoned business owners of incorporated companies may have to sign their personal guarantee when seeking a business loan. Lenders will take every step they can to assure they will be repaid.
Here are the five most common sources of capital for a business, whether it is just starting or is expanding.
1. Yourself. The owner must tap savings, sell something of value or take equity out of a home.
3. Friends. If people who know and trust you won't loan you money or invest in your venture, why would a stranger?
4. Loans. Banks aren't the only small-business lenders. Commercial lenders, credit unions, nonprofits such as ACCION USA, and Certified Development Centers are sometimes open to business loans. Check around.
5. Suppliers. Companies that provide inventory, equipment or other necessities for running a business may assist the business customer financially if they think they will have a long-term profitable relationship.