{"id":5182,"date":"2016-04-04T10:47:58","date_gmt":"2016-04-04T15:47:58","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-law\/smallbusiness\/starting-a-business\/financing-a-business-faq.html"},"modified":"2026-05-08T13:55:00","modified_gmt":"2026-05-08T18:55:00","slug":"financing-a-business-faq","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/smallbusiness\/starting-a-business\/financing-a-business-faq.html","title":{"rendered":"Financing a Small Business Through Loans"},"content":{"rendered":"\n
\n

Financing a Small Business Through Loans<\/h1>\n\n
\n
\n By Amber Sheppard, Esq.<\/a> | Legally reviewed by Catherine Hodder, Esq.<\/a>\n | Last updated\n
\n

Editorial Note: We earn a commission from affiliate partner links on FindLaw. Commissions do not affect the editorial integrity of our legal content.<\/p>\n\n <\/div>\n \n

\n \n <\/i>\n Legally Reviewed\n <\/summary>\n\n
\n

This article has been written and reviewed for legal accuracy, clarity, and style by FindLaw\u2019s team of legal writers and attorneys<\/a> and in accordance with our editorial standards<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n\n

\n \n <\/i>\n Fact-Checked\n <\/summary>\n\n
\n

The last updated date refers to the last time this article was reviewed by FindLaw or one of our contributing authors<\/a>. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please contact an attorney in your area<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n<\/section>\n\n\n\n

You have what you think is a unique startup business idea. You need the capital and financing to turn that idea into a small business. While\u00a0financing a new business<\/a>\u00a0can seem overwhelming for a business owner, it is not impossible.<\/p>\n

This FindLaw article explains small business lending and how a small business owner can raise money using different types of loans and small business financing.<\/p>\n

Form your LLC with confidence.\u202fOur trusted partner LegalZoom has packages starting at $0 + filing fees.<\/a><\/i><\/b><\/p>\n

How Do Businesses Generate Financing?<\/h2>\n

Businesses have two primary ways to\u00a0raise money<\/a>. Which one you choose depends on how much money you need and whether you’re willing to give up control to other people:<\/p>\n

    \n
  1. Small Business Loans:\u00a0<\/b>Like anyone else, businesses get financing from\u00a0friends, family members<\/a>, and banks. Most banks have special divisions that deal with commercial banking (as opposed to personal banking), so an excellent way to familiarize yourself with how bank loans work for businesses is to ask at your bank.<\/li>\n
  2. Equity:\u00a0<\/b>Businesses also regularly give away a part of themselves, an\u00a0equity interest<\/a>, in return for financing. Instead of taking a loan, a business might sell a percentage of its profits to an investor. The entrepreneur’s business gets money in return. This can be an effective way to raise funds without incurring massive debts.<\/li>\n<\/ol>\n

    There is no right or wrong way to finance a small business. Choosing lender\u00a0loans or equity investments<\/a>\u00a0depends on your\u00a0business plan<\/a>\u00a0and long-term business needs.<\/p>\n

    Types of Startup Loans<\/h2>\n

    Regardless of which loan you choose for your business startup, there are some things you should gather in advance:<\/p>\n