ENT500 - Funding Sources for Entrepreneurs: Analysis

This report analyzes various funding sources available to entrepreneurs, crucial for startups and small businesses. It explores the advantages and disadvantages of different financial options, including personal investments, bank loans, venture capital, government assistance, and financial bootstrapping. The report highlights the significance of equity and debt financing, with a focus on personal investment, bank loans, and corporate investment. It details the pros and cons of each source, such as control and flexibility versus risk and paperwork. Furthermore, it discusses the role of social media and other options like crowdfunding. The report uses the Small Business Administration (SBA) website as a primary resource to examine loan programs and eligibility criteria, providing a comprehensive overview of the funding landscape for entrepreneurs. The paper follows APA guidelines and includes a title page, introduction, conclusion, and a reference page.

Running head: FUNDING SOURCES
FUNDING SOURCES
Name of the Student:
Name of the University:
Author Note:

1FUNDING SOURCES
Sources for Funding available to Entrepreneurs.
In case of a small business or for a start- up, the sources of funding is very important, and
it can be looked at from two aspects. The Equity Financing and the Debt Financing. The best
options for the sources of investment are, personal investments, venture capital, business angels,
assistance of the government, bank loans, financial bootstrapping and the buyouts. The bank loan
and the venture capital are the two most availed options among the entrepreneurs, however the
practice and the role of the other financial or investment options are also very much in practice
("Loans", 2020). More importantly, the entrepreneurs or the start- up planners include more than
one form of investment plans or financial sources, in order to ensure the successful establishment
of the venture.
Advantages and Disadvantages of Various Options:
First, the Personal Investment. The personal investment is one of the conventional form
of financial planning in case of starting a new business, the advantageous aspects are, one will
understand the availability of money and therefore can plan accordingly, and can exercise more
control on the decision making. Also, it bars one from making excessive expenditures, including
only the necessity aspects, firstly. The disadvantageous positions include, a strain in the personal
life of the person, and also includes certain psychological impacts on one, along with his or her
family ("Loans", 2020). Also, in case of a failure, it leads to a huge loss, from which one may
never entirely recover. Also, the personal investment means founding the business alone,
therefore a lack of contacts and networks.
Second, the bank loans. The bank loans are one of the conventional forms and most
reliable form of financial source, and this includes both, advantageous and disadvantageous

2FUNDING SOURCES
positions. First, it keeps the expenditure of the company in control, as the financial expense are
monitored by the bank, and secondly, the bank loan is a temporary form of obligation. Upon the
successful payment of the loan, there are no more obligations. Thirdly, the interest on the bank
loan that one has to pay, is tax- deductible. It is especially helpful for the fixed-rate loans, where
the existing rate of the loan remains unchanged even upon the changes in the loan structure
afterwards ("Loans", 2020). However, along with this, there are certain forms of disadvantages,
and first is, it is extremely tough to qualify for a bank loan and is involved with a lot of
paperwork. Also, the interest rates for the small business organizations are often seen to be high,
which often affects the business.
Involving personal savings and assets is also come across with certain advantages and
disadvantages. The former can be referred to the aspects of having a control over the
expenditure, and the later refers to the aspects of failure of the business which can jeopardize the
personal life of the entrepreneur.
Often people ask for money to their friends and families which can has, both positive and
negative aspect. On one hand, the idea remains closed amongst very few members, and the
responsibility of the person increases since they have to ensure the payback, and also, they can
get some amount of networking. However, on the loss or the failure of the venture, there is a
huge risk of face loss, and a belief that help can never be ked or received from them.
The corporate bodies often step up to help the entrepreneurs and they act like the venture
capitalists. They invest a huge amount of money and provide the entrepreneurs with good
amount of networking, however, they often demand a huge share of the profit, and can take back
the funding any day they want ("Loans", 2020).

3FUNDING SOURCES
Grant is another form of help, and it is often regarded as free money, which is the most
beneficial aspect of this. Also, it can be used as a promotional tool by the entrepreneurs.
However, the grants come with a number of clauses. Certain grants are applicable only for
certain aspects of the business and the nature of these grants vary along with the types of the
businesses.
Other Options and Social Media:
Other than these mentioned financial help options, there are also options like crowd
funding or crowd sourcing. This is the last resort of the entrepreneurs.
The social media businesses offer a large number of positive and negative aspects for a
business, on one hand, it offers a large amount of exposure and will help the organizations to
gain a market insight. However, along with this, it also ensures getting highlighted to the market
competitors and increases the need for the qualified personnel to deal with the technical
challenges.

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References:
Loans. (2020). Retrieved 8 January 2020, from https://www.sba.gov/funding-programs/loans