Whether you’re launching a small business or looking to expand one, you’ll likely need funding. This article looks at several business financing methods you can use to generate funds.

Bootstrapping

Bootstrapping is the do-it-yourself method of business financing. It involves investors and lenders as little as possible. When bootstrapping, entrepreneurs tap into their personal resources. They also do everything they can to keep costs low; for instance, they might delay getting an office space for as long as possible. Additionally, as Entrepeneur.com points out, money-stretching methods like trade credit and factoring can make bootstrapping more viable.

Loans and Lines of Credit

If your business can put together a strong application, banks and other lenders can be a viable fund-generating resource. Two common setups are loans (in which a business pays a set amount of money back over a period of time) and lines of credit (in which a business gains access to a revolving pool of money from which it can draw). Both options will involve interest payments. Businesses with a healthy credit history will have an easier time obtaining a loan or line of credit, though even one with a shaky credit record may be able to start out small.

Friends and Family

Relying on friends and family is another business financing method. The upside is that it’s likely that the people close to you believe in your vision and your business, making it easier to get them on board. However, it is vital to structure every agreement in a precise, clear way. Obtaining advice from a lawyer on each agreement is a good idea.

Angel Investors

Angel investors are investors with a large amount of capital on hand. They support businesses in exchange for equity in the company. Angel investors can be a great resource for both launching and expanding a company; however, entrepreneurs should be wary of the amount of control they hand over.

For coverage of additional business topics, take a look at Elevation Financial’s other blog posts.