Thanks to the enormous growth in personal wealth over the past two decades, there are now more funding opportunities than ever for entrepreneurs:

• Lines of Credit. A line of credit loan is designed to provide short-term funds to a company in order to maintain a positive cash flow. Then, as funds are generated later in the business cycle, the loan is repaid. Most commercial banks offer a revolving line of credit, where a fixed amount is available.
• Conventional Business Loans. Traditional loans, often called long-term debt, are often popular initial financing venues for businesses competing in a proven field. Lenders often include government-sponsored lending programs, commercial banks, and small business investment companies.
• Business Alliances. A strategic alliance is an arrangement between two or more companies to pursue a common business objective, such as a joint venture, merger, or cost-sharing plan.
• Angel Investors. Traditionally, angel investors have been business owners or independently wealthy individuals that finance businesses in exchange for equity. Increasingly, however, angels are banding together into local networks that closely resemble venture capital groups. (See Equity Financing for more detail.)
• Asset-Based Financing. Popular with new companies that are growing faster than they can make money, asset-based financing is a system in which lenders accept the assets of a company as collateral in exchange for a loan. Most asset-based loans are financed against accounts receivable and less often against inventory, since receivables are among the most liquid of a company's assets, followed by inventory.
• Venture Capital (VC). While most banks use past performance as the primary criteria for deciding whether or not to lend money to businesses, VC firms make investments based on projected future potential. Investors generally expect a substantial portion of the business' equity and/or profits. Have a qualified lawyer negotiate any investment deal between VCs and your company. (See Equity Financing for more detail.)
• Small Company Offering Registration (SCOR). A SCOR is the sale of common stock to the public without the hassle of an Initial Public Offering (IPO) through a regulated board such as the NASDAQ or AMEX. Unlike formal IPOs, in which all or most stock is sold and monitored through third parties, most companies involved in a SCOR deal directly with shareholders.
• Initial Public Offerings. All offerings of stock and other securities are subject to the federal securities laws as well as to the securities laws of any state where the securities are being offered or sold. Unless there is an exemption that applies to a given situation, these laws generally require that an offering go through a difficult securities registration process.

The rapid growth of the Internet has made finding investors and lenders easy, but the legal issues involved in business financing are complex and should always be reviewed by a qualified attorney.

References:
• Small Business Administration

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