One of the most important steps in this process is to identify all your financing options - don't cripple your business before it starts because you have planned to use one source of financing and then are unable to access that particular source. Always have a contingency plan. This is probably the most common type of financing used when starting a business. These resources may be yours, or may be those of friends or relatives. Options in this category include equity in other assets which you personally borrow against or sell, personal savings, or personal loans.
Some businesses finance start-up costs through private investors.
This type of financing can take many forms, from a simple partnership to the private or public offering of stock. A competent financial professional, such as a CPA, can advise you concerning the laws regulating these options. Under certain circumstances, banks and other financial institutions provide financing for start-ups, but they are not the most common source of financing. This is because loans to start-up businesses frequently pose a high risk, and financial institutions are low risk lenders. Financial institutions must maintain a low risk approach to lending because the money they lend belongs to their depositors, not the institution itself.