Small Business Funding Options - 1170 Words

There are several advantages to accepting funding from a relative. The first, and most obvious, is that by entering into a partnership to pay back this relative, there is no high rate interest to worry about, as there would be with a bank loan. Also, the relative only has to agree to the assistance, instead of applying for bank approval. There is also no risk of depreciation, as there is with the stock market. However, there is also a very large risk with this type of funding. When using a short or long term loan with a bank, once approval is granted, the funding is guaranteed. When borrowing from a relative, he/she can decide at any time to stop funding for no particular reason. By loaning us money for our business, my relative†¦show more content†¦The disadvantage to an angel investor is that we will essentially be putting ourselves at their mercy, and any disagreements will not be taken lightly. In the event, however, we decide to secure a small business loan, the SBA (Small Business Administration) offers a loan guarantee up to $750,000, or 75% of individual loans made by private investors. While this sum is much too high for our start up, we do not necessarily have to request the most money possible. However, the SBA loan guarantee should be used as a last resort, as we must first show that we cannot obtain funding using conventional methods with reasonable terms. We must also offer a personal guarantee for the loan, and demonstrate a sufficient cash flow to repay the loan. In short, the risks associated with each type of funding available to us make our options limited. I believe the best and least risky options are credit cards, as they can assist us with replenishing our supplies, and have the appealing get it now, pay later mantra that is appealing when cash flow is limited. Grants are also a good option, as they are freeShow MoreRelatedAdvantages and Disadvantages of a Partnership in Business994 Words   |  4 Pagesmain fundin g options for a small business and determine how management accounting can be of use to business executives especially in the areas of budgeting, incremental analysis and product costing. Lastly, in addition to identifying the basic components of the marketing process, I also discuss the role technology and social responsibility play in the marketing function. Partnership as a Form of Ownership: Pros and Cons A partnership according to Burrow and Bosijevac (2011) is a business thatRead MoreEssay On Angel Entrepreneurs870 Words   |  4 PagesWhile many investors and business owners do insist that an idea is the important element of any business entity, they also do concur that it is quite challenging to start, operate and sustain any business venture without capital. 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