Three Types of Financing for Small Business Since starting his first company at the age of 14, Steve Rubenfaer has launched half a dozen entrepreneurial ventures. As a strategist and consultant, Steve Rubenfaer leverages his decades of experience to support entrepreneurs seeking outside capital to grow their companies. Small business can fund funding in the form of loans, grants, or direct investments. Types of funding sources commonly used by entrepreneurs include: -
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Business loans: Also known as debt financing, business with strong financial track records can apply to a bank or the Small Business Administration to secure a loan with a long-term repayment schedule. Since the business must demonstrate creditworthiness, loans are not always accessible for new businesses. Angels: Investors who have experience in an industry or sector may fund promising startups with their capital. These investors may require equity and control over some areas of the business in exchange for their money. Crowdfunding: Entrepreneurs can solicit early-stage funding directly from their target customers. Many websites allow business to collect orders to fund the manufacturing and production process. This can provide a source of funding and help business owners gauge demand for their products.