Commercial bank loans typically don't require entrepreneurs to turn over equity or company control. In general, banks prefer to make loans of more than $10,000. Banks like to see:
- Good credit
- A solid business plan
- Ability to repay the loan
- Collateral
Lines of Credit are an arrangement in which a bank extends access to a specified amount of credit to a specified borrower for a specified time period. A line of credit is best suited to help cover expenses that tend to fluctuate throughout the course of a year.
Home equity loans are cost-effective alternatives to other types of loans because they often offer better interest rates. But you may not want to risk your family home to launch your business venture.
Equipment lease financing gives you access to many types of equipment -- computers, copiers, fax machines, cars and trucks -- without tying up your cash or credit lines. Although it doesn't bring in cash, leasing reduces the amount of cash you otherwise have to raise to start your business.
Cash advances from credit cards are easy and quick ways to gain access to cash. But as a long-term financing method, they can be expensive -- credit card interest rates typically run much more than you would likely pay on a bank loan.
Factoring allows a company to "sell" its accounts receivables to an outside company at a discounted rate. This allows the company to receive funds immediately to fund operations and ease cash flow. Factoring is provided by private companies.