Financing a new enterprise can be one of the biggest challenges facing budding entrepreneurs - but even with the economy on the slide, there a number of ways of securing those all-important start-up funds. L-A Score counselor Peter Sassano told the Sun Journal that possible providers of small business capital include "either debt or equity financing from institutional or informal sources". Debt financing is basically a loan that must be paid back and is sometimes secured against assets like property. Institution sources include commercial banks or the Small Business Administration (SBA), which backs some financial assistance programs, whereas informal sources could include family and friends. Some smaller firms also receive alternative investment from suppliers or vendors. This could take the form of beneficial payment terms, special discounts or even direct capital injections. Equity funding is raised by offering shares in the business to potential investors. In this case, the money does not have to be paid back - but a firm's backers will own a share in the company and will therefore expect a return. According to the SBA's figures, 637,000 small businesses started up in 2007.  |