business finance 101, business finance definition, basics, and best practices. Business finance is the funding we need for commercial purposes.
Put simply, it is the money business people require to start, run, or expand a business. If you already have the money you use it. However, if you don’t there are several options.
Investment finance, which we also call equity finance, means selling part of your business. You can do this by selling shares to an investor. However, bear in mind that you will lose some control. If the investor buys shares, he or she will also receive a share of the profits your business makes. We call firms or individuals that make their living by providing business finance venture capitalists.
Crowdfunding is becoming an increasingly popular way of getting business finance. We also call it crowd-source capital or crowd financing. In most cases today, people use the Internet for crowdfunding. The aim is to get as many small investors as possible. There are websites dedicated to crowdfunding.
Some people prefer to borrow the money in the form of a loan and repay over an agreed period. With a loan, you do not lose your independence. Furthermore, you still retain your stake in the business. People usually get business loans from banks. However, community development finance institutions and other businesses also offer loans. In fact, many successful businesses began with loans from friends or relatives. In a typical loan arrangement, the borrower has to pay back the capital plus interest. The capital in this context means the original amount.