Business Loan Financing Options: Public and Private Sources

Before looking for business loan financing it is a good idea to know how business loans can be used. Then, searching for loans that cover the needs of your business is easier. Generally, small business loans can be utilized for the majority of business objectives.

Business Loan Financing

Business loan financing using a small business loan can cover these objectives.

  • Buying property to house a business
  • Improvements, construction, renovation
  • Equipment, machines, furniture, fixtures
  • Working capital and inventory

There are numerous sources for small business loans through, which a small business can get business loan financing. But these sources have certain criteria for investments and loans and areas in which they participate.

Areas of Business Loan Financing

  •  Commercial financing
  •  Leasing equipment
  •  Investment banking
  •  Loans from government
  •  Venture capital (private equity capital)
  •  Commercial property
  •  Angel investors (informal investor)
  •  Start-up financing
  •  Invoice factoring
  •  Purchase order advances
  •  Asset sales leaseback

Many sources of business loan financing are geared to types of businesses. One way to get a small business loan is through the Small Business Administration, though it mostly guarantees loans made by various private and public funding institutions. Numerous private businesses and government agencies provide funds for loans to minorities and women.

The Minority Business Developmental Agency is a federal government agency that encourages the starting and building up of minority businesses. It helps minority business owners with financial planning to enable them to get the funds for business endeavors.

Business loan financing can be sourced through SBA loans, venture capital, and start-up investors and banks. Normally, lenders (banks) that have experience in particular fields of business are the ones that lend money to start-up businesses. Small Business Loan Source is part of the SBA's business guaranteed loan program; it is independent and isn't regulated. It supplies loans to established businesses and those just starting.

The Office of Veterans Business Development aids veterans, members of the military, survivors, and dependents to use small business programs for business loan financing. They help them begin or build an existing business. One of their programs is the Patriot Express. The Military Reservist Economic Injury Disaster Loan program is another source of business loan financing for military members. The Veterans Business Development Officers have representatives in local SBA offices.

Private Money Business Loan Financing

Types of private business loan financing include: equity loans, private money loans, and hard money loans.

Kinds of Private Lenders

  • Small business investment companies
  • Commercial lenders
  • Venture capital firms
  • Business angels
  • Private investors

Some of the reasons private money business loan financing is approved are: less than perfect credit, bankruptcy, construction, real estate, and temporary financing, also called bridge financing.