Planning Your Financial Needs Inadequate capital is the cause of many small business failures. Planning for the proper initial capitalization for your business or expansion is a critical process in which to invest time and effort. There are two basic paths to finding capital for your business. The assets of your firm can be financed by obtaining either debt or equity. Debt is often obtained in the form of a loan which must be repaid with interest.
Banks are the most common source of financing through debt, though there are some alternatives.
This guide looks at alternative sources for debt financing and discusses equity. The first place to look for money is yourself. Look at your cash savings, stocks, bonds, surrender value of life insurance, vested pension or other retirement accounts, and equity in real property. How much of your personal assets you are willing to risk in the business is a personal decision. However, you must invest at least some of your own money in the business, because most lenders see this as evidence of your level of commitment to the business.