Loans and Investors

Created by FindLaw's team of legal writers and editors | Last reviewed June 06, 2024

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Every business idea, regardless of its potential for profit and growth, needs an infusion of cash to get the wheels moving. In fact, securing startup funds - typically through the use of loans and investors - is one of the most difficult tasks for most entrepreneurs. FindLaw's section on Loans and Investors contains informational resources about applying for a small business loan, the advantages and disadvantages of debt and equity, planning an initial public stock offering, and other related resources to help you raise capital for your business. In this section you can also find a list of suggestions on how to fund your business as well as sources you can go to for information on investment banking firms.

Funding Your Business

There are a few options when it comes to funding your business. If you have the funds yourself, you can always fund some or all of the business yourself. Of course, most people are hesitant in wrapping up all of their savings in a business venture that may or may not be successful. Most people choose to fund their businesses through loans and investors. There can be several sources for loans or investors, which can include friends and family as well. However, receiving loans from friends or family can cause problems in personal relationships, and should be thought out carefully.

To avoid putting personal relationships in danger, you can always apply for a loan from the U.S. Small Business Administration (SBA). The SBA is a helpful resource for small businesses as they provide information and resources for business owners, including offering four basic loan programs to small businesses. These loan programs each have various eligibility criteria a business must meet in order to be granted a loan, but it's worth researching if your small business needs a loan. Other options for loans include commercial banks, savings and loans associations, and credit unions. You can even use a credit card to finance your business, but this can be risky and costly, so you may want to use this option as a last resort.

Investment Banking Firms

If you decide to have investors to help you with raising funds for your business, it's worth considering an investment banking firm. These types of firms help companies and people by acting as an agent or underwriter in issuing securities. Traditionally, investment banks focus on corporate finance by advising businesses on mergers and acquisitions, and helping businesses raise funds. Investment banks differ from retail and commercial banks because the former does not accept deposits. In addition, any advisor who is involved in providing investment banking services is required to be a licensed broker-dealer, which also makes the advisor subject to the rules and regulations of the Financial Industry Regulation Authority (FINRA) and the Securities and Exchange Commission (SEC).

Hiring a Business and Commercial Attorney

Starting a business can be an exciting and daunting endeavor. A business and commercial attorney can help you navigate through all of the aspects of starting a business, from reviewing agreements with investors to providing information about the laws that are applicable to a business in your industry and location.