WHAT YOU NEED TO KNOW:

Financing for your business may be obtained from private investors, lenders, and other financial institutions. In Colorado, as nationwide, most new businesses are initially financed by personal investments from the owner, family, friends and personal business contacts. While it is not impossible, it is often more difficult for new businesses to obtain outside financing. The vast majority of outside financing for small businesses comes from commercial banks and savings and loan institutions. Commercial finance companies, leasing companies, insurance companies, and private or public stock offerings are other financing vehicles that may suit a particular small company’s needs. The next three sections review the different financing sources and some of the advantages, disadvantages and limitations of each resource. As you seek financing for your business, there are questions you should ask:

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No matter which type of loan or financing option you choose, the lender will judge your ability to repay the loan and evaluate your collateral. He/she will ask for information to determine how you manage your business, how likely you are to default on the loan, the size of the loan compared to how much you have (your debt to tangible net worth ratio) and your company’s ability to liquidate its current assets. In all cases, the potential for a profitable investment as reflected in a sound business plan is a key step to obtaining the financing you need. Assistance in how to prepare a business plan is available through a number of government offices and private management and financial consultants. Listed below are many financing methods.

1. Short Term

•  Credit Lines
• Short-Term Loans
• Asset-Based Loans
• Contract Financing
• Factoring

http://www.state.co.us/oed/guide/pdf/Guide13_Financing.pdf (Pages 1-2)

2. Intermediate & Long Term Financing

• Term Loans
• Equipment & Real Estate Loans
• Leasing

http://www.state.co.us/oed/guide/pdf/Guide13_Financing.pdf (Page 1)

3. Government Guaranteed and Government Direct Sources of Financing

http://www.state.co.us/oed/guide/pdf/Guide13_Financing.pdf (Page 2)

4. U.S. Small Business Administration (SBA) Finance Programs

http://www.state.co.us/oed/guide/pdf/Guide13_Financing.pdf (Page 2-7)

5. Equity Financing

http://www.state.co.us/oed/guide/pdf/Guide13_Financing.pdf

 

• Businessfinance.com has information on the different types of loans available for a small business and information on how to get ready for the application process.

• Entreprenuer.com has all the information one needs to start up a small business.

• Smallbusinessfinance.com has tips on finance for new small business owners.

• Businesstown.com has a variety of information including a glossary of terms used when applying for a loan.

• Mesacobus.com has great information on starting a small business in Grand Junction.

   Disclaimer: The above financial statements are meant to serve as a guide to assist you in your small business finances. When finalizing any financial statements/documents, contact your accountant or financial advisor for further review.