Funding a Small Business

Funding a Small Business
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Funding a Small Businesses
There are various available types of funding for small businesses. Getting funds from friends and family is one of the available types of business funding. The business founder can get money from friends and family in exchange for a part of the business, which is equity funding. Friends and family members can also loan someone money, which is debt funding. The advantage of this type of business funding is that it is easy to get while compared to others, such as getting bank loans. The downside of this type of funding is that relationships might be ruined if a business fails and friends and family members cannot get their money back (White & White, 2016). Therefore, one should be careful about this type of funding.
Another type of funding available is getting loans from financial institutions. This type of funding is debt funding. As for this type, the business owner will repay the money given with interest. The advantage of this type of funding is that one can get as much as he or she needs for the business. The disadvantage of this type of funding is that the bank will require a track record or require someone to secure the loan with assets (White & White, 2016). If one lacks the assets needed, he or she may fail to start a business.

Taking on a partner is another type of funding available. The partner might choose to be an employee of the business or not. The advantage of this type of funding is that the partner will bring about a myriad of resources, such as business management skills besides the money required (White & White, 2016).

The major disadvantage of having a partner is that one will be forced to give out a part of his or her business.

References
White, D., & White, P. (2016, February 9). 10 ways to fund your small business. Retrieved December 27, 2018, from https://www.entrepreneur.com/article/270556