Banks: The most common source of funding, banks, will provide a loan if you can show that your business proposal is sound.

Venture capital firms: These firms help expanding companies grow in exchange for equity or partial ownership.

It is often said that small business people have a difficult time borrowing money. This is not necessarily true.

Banks make money by lending money. However, inexperience of many small business owners in financial matters often prompts banks to deny loan requests.

Requesting a loan when you are not properly prepared sends a signal to your lender. That message is: "High Risk!"

To be successful in obtaining a loan, you must be prepared and organized. You must know exactly how much money you need, why you need it, and how you will pay it back. You must be able to convince your lender that you are a good credit risk.

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Most of these concentrate on M&A Arbitrage (Mergers and Acquisitions) - or more usually Mergers.

The manager will actively seek companies which have been targeted as potentials for takeover, and buy into that company, in hope M&A activity will drive up price.

This method is often enhanced by use of leveraging (gearing up / borrowing) (remember LTCM?) - and sometimes using Derivative Structures such as Options - or hedging methods such as selling short.

Depending on structure, methodology, management style, leveraging etc., potential rewards can be substantial, but so can risks.

Not all Arbitrage investments are same - just like any other asset class, I would strongly suggest that anyone considering this should perform their own Due Diligence and seek professional advice.

One very common place where Arbitrage happens every day - by people just like you and me..... is eBay!

Sellers are locating items for sale from sources which may sell them very cheaply (flee-markets, garage sales etc.) and then selling them online for a tidy little profit.

These people are exploiting price differential - arbitrage - and there's nothing wrong with that!!

It’s all about ‘Supply and Demand’ - but that’s another story!

(the information contained herein is for information purposes only and should NOT be considered as advice or recommendation relating to purchase or sale of any investment).

An article by Gary Durkin Founder of the Internet Advice Center® http://www.InternetAdviceCenter.com

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