What options should I consider as I try to finance my business?

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What Options Should I Consider As I Try To Finance My Business

Even the best business ideas will be limited in their reach if there is not adequate financing. In New Jersey, every business must have some form of capital to either get off the ground or to grow once it is in operation. This is a frequent obstacle that prevents prospective business owners from moving forward.

It is relatively easy to look up the possible options to accrue money for a business, but it is vital to know which is the preferable alternative for the given situation. The product or service itself will largely dictate how to pursue financing.

For example, if a person is starting a business that has a reasonably good chance of success due to their experience, training and education, they will likely have fewer obstacles to getting the money to start and improve it than a newer business whose potential is not as blatantly recognizable to the layperson. Regardless, it is wise to know the basics for where money can be acquired.

Where can I go to get money for my business?

There are many factors to think about when seeking financing and all should be assessed with the present and future in mind. It is also useful to think about the legal ramifications. The first strategy is obviously going to the bank.

Banks are open to providing financing for a business if it makes sense to them. Still, it can be difficult to have a business plan that is deemed sufficiently viable for a bank to show the willingness to provide the necessary funding. The bank will want a person to have great credit, credentials, collateral and the education and skills to make the business work before it will consider giving a substantive loan. The interest rates are also a concern as they could be high to start.

There are government entities like the U.S. Small Business Administration or the Economic Development Authority that are agreeable to lending new and growing businesses money. These are more flexible than banks and they are likely to be more willing to provide financing if the business shows potential and there is a reasonable plan in place.

Selling shares in the business could also work. This could be investors who are looking to get involved with an idea they think will sell or those who see a business that is already in operation and believe that it can grow to greater heights so they can profit. It could also be friends, relatives and past associates. It is important to have a legal agreement with so-called “angel” investors as disputes are common if people lose money or the business rises to major success.

Crowdfunding is a way for businesses to get money through the Internet. This is often done via small donations. The benefit is that the interest rates will be low or non-existent. In addition, it can be a promotional vehicle. Critically, the people investing may be strangers, so it is key to state the parameters of the investment from the outset.

People who think they can simply figure it out as they go along often make avoidable mistakes. This can be prevented by having experienced and professional legal help from the start. Choosing between going to a bank, seeking angel investors, selling shares, going to lending organizations and other strategies can have long-lasting implications on the business succeeding or failing.

Calling those who have extensive experience in advising individuals and groups to find financing for their business can help. It can also be useful with all future endeavors once the business is up and running. This could involve contracts, expansion, employment issues, litigation, franchising, protecting it from unforeseen events and more. Business law is complex and qualified people can help with a business’s creation, success and improvement.


Michael Ritigstein is a Founding Partner of the firm concentrating his efforts in supporting the firm's litigation, corporate and estate matters. Mr. Ritigstein graduated from the University of Delaware in 1996 and Seton Hall University School of Law in 2000. In 2007 he received a Masters of Law in Taxation with a concentration in Estate Planning, from Temple University's Beasley School of Law.

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