If you are an entrepreneur looking for capital sources to start your business or expand your business, you should explore several options. Private financiers are different depending on what to offer to your business. If you have a small start-up business and exploring options to finance your business, you should differentiate between debt financing and equity financing.

Here are three sources of private financing for a small business:

  1. Venture Capital

Venture capital companies invest in small businesses in exchange for equity. The venture capitalists must investigate your businesses’ plan, financial reports, and expected profits before accepting to invest in your company. Your company will attract venture capitalists if it has potential for growth as the investors want fast returns for their invested money.

Venture capitalists also offer guidance to small businesses like mentorship, expanding sales networks, and development opportunities. However, if you obtain financing from venture capital firms, you will give a certain percentage of your business ownership to them. You should include them in the decision-making of your company and share profits.

  1. Angel Financing

Angel financiers are a type of individuals who can provide funds for your start-up business or for expanding your business, expecting high returns from their money. If your enterprise does not have collateral for debt financing from bank loans, angel financing can be a good option. They provide funds to your business with a convertible note of specific percentage ownership of your business. They can reclaim their money plus interest.

  1. Alternative Lenders

If your small business is struggling, you can consider alternative and fintech lenders as a financing option for your business. They offer short-term and high-interest rates to small firms seeking to grow quickly and expand their capital. Alternative lenders are very flexible; hence many small companies prefer them to traditional bank loans.

Alternative lenders do not require your business equity as venture capitalists and angel investors. Instead, they offer loan agreements similar to traditional banks but with lesser requirements to qualify for the loans and higher interest rates. Examine all risks before choosing any financing for your business. You can access funding for your business from Commercial Capital Finance to grow and expand your business.