FrederickS_BUSN621assignmentweek5.docx - Financing a Small Business 1 Financing a Small Business and Financial Documents in the Business Plan Sarah

FrederickS_BUSN621assignmentweek5.docx - Financing a Small...

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Financing a Small Business 1 Financing a Small Business and Financial Documents in the Business Plan Sarah Frederick BUSN 621 Dr. Chambers September 8, 2012
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Financing a Small Business 2 There are many ways of securing financing for a small business venture, but choosing the correct one depends on the type of business and the type of management style each individual owner has or wants to develop. Entrepreneurs can try to find financing by securing a loan from a bank or family members, or taking on partners or investors, which leads to less control in the business. Entrepreneurs can also go more risky routes of using credit cards or cash advances to fund their business, but those types of funding usually have incredibly high interested rates and are not recommended if avoidable. The management style and type of business that you choose to have can be the deciding factor in how a person may choose to finance a business. If the owner wants to have the most control of their business, then it may be best to apply for a small business loan; however, interest rates on a loan may be higher than you can afford, or higher due to credit issues, and may be more than you think is worth paying. Also, getting a loan at higher interest rates may be higher than an investor would charge you for the same type or amount of loan. Before agreeing to any type of loan, either from a bank or investor, the business owner must ensure it makes good business sense for the them and their business.
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