As a small-business owner, you generally have two basic ways to raise startup business funding: You can offer investors equity ownership in your company or take on debt in the form of a loan. Both funding sources can provide your business with the cash it needs, and each comes with benefits and drawbacks to consider. Here’s an overview of equity and debt funding, their pros and cons, which businesses may be better suited to each and how to obtain funding.
Access to Capital
By all accounts, our economy is continuing on a path of recovery in the aftermath of the recession. And while this should signal good times ahead for our nation’s small businesses, entrepreneurs are still struggling to get what they need most to grow and thrive: access to traditional loans and more reasonable terms on alternative lending. That’s why we addressed this problem head-on during our access to capital panel on May 12 at our Small Business Leadership Summit–an event that’s brought more than 100 small business owners from around the country to D.C. to speak directly to policymakers, issue experts and members of the Administration about the top issues facing small businesses, including the shortage of lending for entrepreneurs.
No one likes rejection. Whether it’s a “no” from your dream job, the person you love or the bank, it stings. And if you’re a small business owner, you might know the feeling all too well. Of small businesses that applied for financing in the first half of 2014, only half received any amount, according to a survey by the Federal Reserve Banks of New York, Atlanta, Cleveland and Philadelphia. NerdWallet asked lending experts the burning question so many small business owners want answered: Why are small business owners turned down for small business loans?