Once the business idea has been formed into a business plan, the search for funding begins. Many sources used for management advice can also lead to funding. New business ideas frequently will not qualify for conventional financing at a bank because banks require collateral or hard assets before they will lend a business money. The venture capital funds and angel capital investors will require a percentage of ownership or a preferential return of their capital in the new business as well as substantial operating control for their assumption of risk. Financing can come in many different forms.
Equity financing gives ownership interest in exchange for money.
Typically, there is no immediate repayment schedule, however, you will have to give up some ownership interest in the business. Debt financing is a loan with interest and repayment provisions. You do not have to give up ownership interest, however, interest and principal payments will have to be made according to a set schedule. The SBA can assist you in starting a business, financing a business, understanding government regulations related to the business and providing all other resources a new business may require.