Business financing: main sources and programs

Sources of business financing

Many novice entrepreneurs are looking for sources of business financing to start their own business. This can be a loan, investment or grant. In this article we will talk about the features, advantages and disadvantages of these types of investments.


Today, there are plenty of ways to find money to start a business, which allows a novice entrepreneur to organize a small, medium or large business.

Main sources of financing

A distinction is made between external and internal funding. Internal consists in the use of own capital (net profit, deductions), and external – in the use of borrowed and raised capital.

External investments are often required to organize entrepreneurship. This can be a bank loan, third-party investments and a grant. The peculiarities of these types of loans will be discussed later.

In the case of a business organization with minimal investment it is possible to use self-financing.

Naturally, this is the best option, because you do not have to pay the interest rate or “shares” with someone your new source of income.

Direct and debt financing

Today, debt financing is considered to be the main source of raising money. It is beneficial because it does not imply partial sale of the business to another person. Often the attraction of debt capital brings good results. The main purpose of such investments is not to obtain full control, but to fix the income for 1-3 years.

Direct investments are capital investments in the share capital in order to extract income and get the right to participate in the management of the company.

The investor has the right to participate in the board of directors, it influences the formation and change of the business management team, proposes strategies for the development of the company.

The way of investing is chosen depending on your goals. If you are going to start a large production facility, it is much more efficient to lease the equipment.

How do I get funding?

How to get financing is an important issue that concerns not only beginners, but also more experienced entrepreneurs. It is necessary to look for financing options after the business plan of the project has been drawn up.

This is a very important document, without which we can hope for external investments. Banks and investors need to be provided with a plan. It is important for banks to make sure that the loan is repaid on time.

As for investors, they need to know what time the company will become profitable and profitable for them. Read here why and how to develop a business plan.

If you own a property where you plan to set up a business, such as a chip factory, bakery or something similar, and the value of this property is enough to repay the loan, you can count on a loan in almost any commercial bank.

Advantages of lending

Often business crediting by commercial banks is carried out without problems, but only if the business is already developed and brings a stable income or if the borrower has already developed one business and he is going to open a new one. If you are going to take money to start a business on credit from scratch, prepare for the difficulties.

Consumer credit in the bank

If you are more attracted to small business ideas and do not think about a large enterprise, take a consumer loan from a bank. Many Russian banks give a loan of up to 100,000 rubles without collateral, without income certificate and without guarantors.

To get more serious amounts of credit, you will need a surety, pledge or certificate.

Money on bail

If you have a car, apartment, non-residential premises or other valuable property, you can get a loan on bail. The funds offered by the bank are often not enough to develop a large business. It should also be noted that only with 100% confidence in the success you can think about lending.


Investing is a good way to get money to start your own business. The search for investors is that you need to find a partner who is ready to partially or fully finance your undertakings.

Finding an investor is a difficult but real challenge. Investors are prudent and cautious people, they will not give you money for something that can fail.

To attract investors or partners will need a carefully considered business plan, and on this issue it is better to contact the experts. Read here to learn how to develop this document.

Lenders should be more than confident that the business in which they invest their own money will be profitable for them.

How do I get a grand?

A grant is the best alternative to bank loans and other types of financing. The advantage is obvious: the grant does not need to be repaid. But keep in mind that grants are not meant to be used for nothing. The person who pays the money is interested in you solving his or her problems.

Often, budget funds are allocated for business grants for the development of small and medium-sized businesses. Money is paid for the fact that it wants to develop a priority type of activity for a certain region.

For example, it is quite possible to get a grant for creation of a waste processing plant, research of new energy-saving technologies, for environmental improvement, etc.

Grants are provided for innovative projects where there are serious scientific developments. The main Russian source of grants is the State Fund for Assistance to Small Innovative Enterprises in the Scientific and Technical Sphere. Sometimes the money is allocated by large manufacturing companies, which are also interested in developing high technologies.

Finally, one of the most promising areas where serious investments are not needed is the Internet business, whose ideas can be found here. In this area is enough a few thousand rubles, you can do such activities, where you do not need money, only knowledge.