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Funding For Small Business

Funding For Small Business Demystified


Funding for small businessis an area that makes entrepreneurship possible in every sense. There are very few businesses that can boast start-up success without having the support of some kind of financial assistance from an external source in the beginning




Funding can come from various places depending on the type of loan you require:

Small Business Start  Up Funding

Small Business Start Up Funding


  • Personal: Friends and family borrow you money to cover costs of equipment, supplies and the like.
  • Government: There are many government supported programs that encourage small business growth and have different types of funding available to different types of businesses.
  • Banks: Basically every bank has some kind of focus on encouraging entrepreneurship by giving access to loans for new businesses.
  • Investors: This is more an investment than a loan. People give you the money you need to get going in return for equity and profits. There are some instances where you can provide conditions and perhaps offer a stakeholder position for a limited time like no more than five or ten years. After which the business will belong entirely to you once again. You can also keep stakeholders out of the general decision-making process and running of the business, whereby they are seen solely as financial investors and have no say about how the business is run.


How Small Business Funding Works


Funding for small business works much the same as any other loan when it comes to the application process. There are a few steps you have to adhere to in order to be successful, namely:


  • Providing a good business plan. Whether you approach a bank, friends or family, investors or the government you will be required to show why, how, where and what makes your business a venture worth supporting. In your business plan you must outline things like projected income and expenditure over a period of at least three years, how much money you require and what you will be spending that money on.
  • Some lenders will need to have collateral before approving your loan. This can come in the way of any large asset that is worth the amount you are asking for like a car or house.
  • A good credit record is imperative when applying for a loan. If you don’t have one, sometimes a lender will consider your application if you have someone with a good credit rating to co-sign with you.


Once you’ve successfully completed the application process, the money will usually be deposited into your business account within a matter of a few working days. It is important that you use this funding as you stated in your application if you want to give your business the best chance at success.

Most start-up businesses don’t make it past the second year of operation due to the misuse of funds. It is therefore a good idea to have a professional accountant or financial advisor that you can turn to for advice during this process. You will then be in the best position to make the funding for small business work for you and your new company.