Financing a Business

Written by John Mussi


Continued from page 1

How strong is your management team?

How does your need for financing fit in with your business plan?

If you don't have a business plan, make writing one your first priority. All capital sources will want to see your business plan forrepparttar start-up and growth of your business.

There are two types of financing: equity and debt financing. When looking for money, you must consider your company's debt-to-equity ratio -repparttar 137222 relation between pounds you've borrowed and pounds you've invested in your business. The more money owners have invested in their business,repparttar 137223 easier it is to attract financing.

If your firm has a high ratio of equity to debt, you should probably seek debt financing. However, if your company has a high proportion of debt to equity, experts advise that you should increase your ownership capital (equity investment) for additional funds. That way you won't be over-leveraged torepparttar 137224 point of jeopardizing your company's survival.

You may freely reprint this article providedrepparttar 137225 author's biography remains intact:

John Mussi is the founder of Direct Online Loans who help UK homeowners find the best available loans via the www.directonlineloans.co.uk website.


How to Finance a Business

Written by John Mussi


Continued from page 1

Banks are one ofrepparttar most common sources of debt financing. There are many other sources for debt financing including: savings, loans and commercial finance companies. It is also possible to ask for funding from family members, friends or colleagues, especially whenrepparttar 137221 capital requirement is small.

Traditionally, banks have beenrepparttar 137222 major source of small business funding. Their principal role has been as a short-term lender offering demand loans, seasonal lines of credit, and single-purpose loans for machinery and equipment. Banks generally have been reluctant to offer long-term loans to small firms.

In addition to equity considerations, lenders commonly requirerepparttar 137223 borrower's personal guarantees in case of default. This ensures thatrepparttar 137224 borrower has a sufficient personal interest at stake to give paramount attention torepparttar 137225 business. For most borrowers this is a necessary evil.

You may freely reprint this article providedrepparttar 137226 author's biography remains intact:

John Mussi is the founder of Direct Online Loans who help UK homeowners find the best available loans via the www.directonlineloans.co.uk website.


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