Most small businesses use various combinations of these. Equity is usually limited to funds and assets of the owner, family and friends that are placed in the business. The sale of stock outside of the owner's immediate family and friends is limited to a small percentage of small companies.
Debt financing is the most common form of small business financing.
The most common source of debt financing is bank loans. While banks are the primary source of lending, there are numerous other sources, many of them public, that have been created to make loans to small businesses. Deferred asset capital involving such methods as factoring, is a rapidly expanding source of capital for small businesses. Since 1992 National Small business United and Arthur Anderson have been conducting national of small business owners to determine the trends issues and concerns of small and mid-sized businesses. This survey has identified some major changes in the way small businesses are financed.