{"id":5184,"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-basics.html"},"modified":"2026-06-02T14:36:00","modified_gmt":"2026-06-02T19:36:00","slug":"financing-basics","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/smallbusiness\/starting-a-business\/financing-basics.html","title":{"rendered":"Small Business Financing: How to Raise Capital Without Giving Up Total Control"},"content":{"rendered":"\n
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Small Business Financing: How to Raise Capital Without Giving Up Total Control <\/h1>\n\n
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\n By Amber Sheppard, Esq.<\/a> | Legally reviewed by Catherine Hodder, Esq.<\/a>\n | Last updated\n
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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

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Small business financing provides capital through loans or investments to start, operate, or expand a commercial venture. Entrepreneurs should know the basics of small business financing to launch or grow their business.<\/p>\n\n <\/div>\n\n\n\n

The main reason small business owners<\/span>\u2019 new ventures fail is inadequate funding. Sufficient available capital is essential for starting or expanding a business. Having a small business loan<\/span> or increased cash through angel investors<\/span> isn\u2019t enough to succeed. Being able to plan bank loan<\/span> repayments<\/span> and keep up with bookkeeping is needed, too.<\/p>\n

This article helps explain debt and equity <\/span>financing<\/span> options<\/span>. It also covers how a small business owner<\/span> can navigate and manage business finances.<\/p>\n

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Forecasting Your New Business Financial Needs<\/h2>\n

Before\u00a0inquiring about financing<\/a>, ask yourself if your type of business<\/span> needs the money. Also, ask what additional repayment<\/span> expenses come with it. Consider how much debt versus equity you have in your new business. High amounts of debt won\u2019t attract investors or lenders<\/span> to trust you if you haven\u2019t invested in your own business<\/span> or gotten others to invest with you.<\/p>\n

Answer these questions to understand your debt-to-equity ratio fully and what would be ideal for your situation:<\/p>\n