ABSTRACT
Finding money to fund a business is a challenge for nearly all entrepreneurs. Many business owners use their own savings and borrow from relatives and friends to get started. Some rely on credit cards. The drawbacks of these strategies include limited funds and high interest rates and, sooner or later, a business will need to obtain financing from external sources. This chapter introduces various sources of financing and their pros and cons from the perspective of a small business owner. Before going into specific financing alternatives, it is useful to first consider the characteristics of debt versus equity financing and the different stages of a firm’s life cycle.
