Businesses at different stages of development have different financing needs. Below are types of financing and sources of funding appropriate for various stages of development. Types of Financing Available
- Start-up financing: for new companies with limited
business data to provide investors. A company might also have little to no
assets to use to leverage investor financing.
- Financing growth/expansion: for companies who have been in existence long enough to provide substantial business data to investors. A company is also more likely to have assets that it can provide to leverage investor financing.
- International trade financing: for companies either
currently involved in importing and exporting or who are thinking about international
trade and need special arrangements to finance it.
Start-Up Financing
Start-up companies may need sources of financing that can work with them even
if they have limited financial or sales data about the company. A business might
also have a limited amount of money to contribute to investment involving loans
or ownership (equity) stakes in the company.
The following investors are the likely financing sources for start-ups:
Financing Growth/Expansion
An existing company looking to expand operations is likely to have more financial
data to provide to potential investors than a newly formed company. This financial
data will help reduce the uncertainty that investors face in deciding to invest
in a company.
The following investors are likely financing sources:
International Trade Financing
A company involved in international trade, or just thinking about it, can finance imports and exports through the use of letters of credits (LCs) provided by business loan and credit providers. The Export-Import Bank Small Business
Services
Provides resources for businesses that will help them offer the most attractive financing possible to potential or existing foreign customers. The ability to offer financing or credit terms is often the most critical factor in increasing export sales. Sources of Financing
Microcredit providers
Microcredit providers often lend money in small amounts ($35,000 or less), at
low interest rates, typically against little or no collateral. Find a list of microcredit providers in your state:
Business loan and credit providers
These financing sources generally lend against collateral that a business provides, which can include working capital (inventory or accounts receivable), equipment, or fixed assets. Major credit card companies can be a major source of financing for new businesses.
Equity capital providers
Equity capital providers can provide investment cash in exchange for an ownership
stake in the company. Many of them will invest on the strength of a company's
industry and the company's growth prospects within that industry, even if the
company is relatively new. Equity capital providers will invest largely on the
strength of past business performance and future growth prospects.
Related links:
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Research and Data
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Education and Training
Spotlight on Business
Development Themes
Building and Sustaining
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Attracting Financing Sources
State-level Resources
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