When you first start looking for $ to finance your business, you are tempted to get it from anyone and anywhere. Keep in mind: NOT ALL MONEY IS EQUAL!

Click here to view and print: the Financing A Business notes handout.

The various sources of money require different types of return on their investment (ROI) and provide you with different benefits and disadvantages.

Questions To Think About Before Looking For Money…

1. Are you willing to give up some ownership of your business?
2. Are you willing to have debt that you have to repay?
3. How much control of your company are you willing to give up?

1. Money with interest.
2. Share in profits.
3. The ability to influence the decisions and direction of the company by sharing experience, knowledge and connections.

1. Debt Financing
2. Equity Financing

• A loan from a bank or individual.
• Repay the amount (the principal) of the loan plus interest.
Need assets to use as collateral or a proven track record to convince the lender to invest.

• Keep complete ownership.
• Keep all profits.
• There is a definite amount to repay.
Easy to get money from family or friends "LOVE MONEY".

• Must risk personal assets to secure the loan.
• Difficult to get money from a bank.
If you borrow money from family or friends, you may jeopardize personal relations.

• Money from a Venture Capital Company "VC" or Individual also known as an "Angel" investor.
• No amount to repay.
• Investor wants a percentage of ownership in the business for the money.

• No definite amount to repay.
• Not personally responsible for money.
Investor may bring expertise, knowledge, skill, and connections to your business.

• Lose some control of the business.
• Lose a percentage of profits.
Requires an exit strategy (within 5 years) so the investor can make money. (IPO, investor buy out, get acquired, close business).