Avenues for Financing a Small Business

Getting a new business started, surviving periods of low cash flow, or meeting operational expenses can be difficult for small business owners. Exploring possible avenues of financing early is a wise idea. Planning ahead makes the entire situation easier to get through.


Devise a business plan and make appointments with investors to offer them the opportunity to back the idea. If a new product has been created, bring a prototype to demonstrate how the product functions. A program or service can be explained with a thoughtful and concise presentation. Research investors to determine what businesses they have supported in the past and seek those that are interested in your business.

There are companies and organizations that help start up business in specific industries. Technology, alternative energy development, and efficient food production are popular fields that attract investing organizations.

The Small Business Administration (SBA)

This organization is a government agency set up in 1953 with the purpose of helping people begin and operate small businesses. Advise from experienced business owners, seminars on developing a business plan, and loans to start a business are some of the services provided by the SBA. Visit the website for more details on programs and services offered.

Bank Loans

Bank loans may be a possible avenue for small business financing. The application process is lengthy and the approval rates are declining as many businesses are closing in the current economy. Interest rates mean the business is starting with built-in debt. This is an even less likely solution when the business is experiencing an issue with cash flow.


Once a small business has opened, factoring can ensure an ongoing source of cash at no upfront cost. Invoices are purchased by a factoring company for a percentage of the face value. The business gets the cash and the company recovers the fee when the customer pays one-hundred percent of the invoice. The percentage range is typically eighty to ninety-six percent.

The fee varies, but is usually two to three percent of the total invoice value. Whatever money is left over after the fee is collected is returned to the small business. The business can utilize factoring for a certain amount of time or as an ongoing arrangement.