Friends and Family Initially consider looking to friends and family members for loans. Loans from this group may carry a lower interest rate than commercial loans or no interest at all. Next look to banks. The small business community is the fasted growing segment of the financial market today. Nearly one-half of outside financing for small business comes from commercial banks.
Banks usually require personal guarantees and collateral.
A source of collateral for a loan is your home. The approval rate for a home equity loan is much higher than for the average business loan because of its lower risk to the lending institution. If you can't repay the loan, the lender of a home equity loan could foreclose on your house. Interest on a home equity loan may be tax deductible. Credit grantors sometimes will grant a loan that is secured by a passbook or securities and a personal guarantee from the borrower and often the member of the family who may have control over family assets.