http://hbcenter.org/wp-content/themes/neohced/images/sc_inactive.png http://hbcenter.org/wp-content/themes/neohced/images/sc_inactive.png http://hbcenter.org/wp-content/themes/neohced/images/sc_inactive.png

Financing Your Business

Whether In the start-up or expansion phase all businesses need adequate funding In order to ensure success.when exploring your funding options,consider the following factors:

  • Do you have an established business plan and pro forma?
  • Are your needs short-term? How quickly will you be able to pay back the loan or provide a return on investment?
  • Do you need money for operating expenses or for capital expenditures that will become assets,such as equipment or real estate?

Typically,financing is categorized into two fundamental types:debt financing and equity financing.As a third form of financing,some businesses eligible to participate in various business grant programs.

DEBT FINANCING

Debt financing means borrowing money that is to be repaid over a period of time,usually with interest. Debt financing can be either short-term (full repayment due in less than one year) or long term (repayment due over more than year). The lender does not again an ownership interest in your business and your obligatiions are limited to repaying the loan. In smaller businesses, personal guarantees are likely to be required on most debt instruments; commercial debt financing thereby becomes synonymous with personal debt financing.

Specific Sources of Debt Financing:

Friends and family are still your best source for both loans and equity deals,especially when starting up your business. They are typically less stringent regarding your credit and their exepected return on investment; however, have a businessplan and properly document your relationship on paper to avoid any future problems. Credit cards are a great tool for case flow management, assuming you use them just for that and not for long-term financing. Keep one or two cards with no balance on it and pay it off every month to give yourself a 30 to 60 day float with no interest, however, if poorly managed they can be quite expensive.

Bank and Government loans come in all shapes and sizes-from microloans of a few hundred dollars, typically offered by local community banks, to six-figure loans by major national banks. These are much easier to obtain when backed by assets (home equity or an IRA) or third-party guarantors (e.g, government sponsored SBA loans or a cosigner). If you obtain a line of credit rather tahn a fixed-amount loan, you don’t start paying interest until you actually spend the money. For more Information about apecific loan programs, please read further:

Commercial Bank Loans

Goverment Loans

Non-traditional Lending,Credit Unions & Micro_Lending

.

Interested?

For more information or to schedule an appointment, contact our office @ 216-281-4422 or info@hbcenter.org

Support the HBC by making a donation

HBC Team 2013 Please support our cause! As the leading Hispanic non-profit economic development organization in Ohio, The Hispanic Business Center uses donations to support and promote Hispanic entrepreneurs by providing business assistance services since 1996.

 

EQUITY FINANCING

Equity financing describes an exchange of money for a share of business ownership. This form of financing allows yoy to obtain funds without incurring debt; in other words, without having to repay a specific amount of money at any particular time. The major disadvantage to equity financing is the dilution of your ownership interests and the passible loss of control that may accompany a sharing of ownership with additional investors. Visit www.jumpstart.org for more information.

BUSINESS GRANTS

Business grants are specifically designed to help start a new business or a expand an existing one. The amount of the funding can vary from as little as $500 to as much as $5 million. Such grant funding essentially provides the money (fully or partially) that an applying entrepreneur which does not count as part of his or her own risk.in other words,it's completely risk free.The amount granted does not have to be repaid. This is much different than a business loan which requires repayment with interest.  Specific Sources of grants