Whether just beginning or contemplating expanding, adequate “capitalization” is as important as it is elusive. When you need a loan and/or a line of credit, banks and other regulated financial institutions are more than plentiful.  In addition to banks and savings and loan institutions, you will want to consider several of the available credit unions.  You must carefully read and understand the terms of your loans and letters of credit.  If you are unfamiliar with horror stories about a business having its line of credit “pulled” you must consult your attorney, accountant or a non-adversarial banker.

There are more elaborate avenues of obtaining financing as well.  These include Small Business Administration Guaranteed Loans, venture backed financing, private equity, “angel” investors and Mezzanine.  Almost always, these sources will require personal guarantees just as banks, savings and loans and credit unions require personal guarantees.

Sometimes you may be tempted to start asking family, friends, acquaintances and other non-institutionalized entities for financial help and loans for your business. 

Securities and department of finance laws may come into play if you solicit (even just indirectly ask) for this kind of “outside the box”   financial assistance.  LOOK OUT.  Should your solicitations fall within the federal securities and the state finance regulation laws, you can expose yourself to criminal, civil and administrative consequences.  Yes, you must consult your hated lawyer in these circumstances.

NEXT TIME,   where you transact business is important!