NKWS Guide To Starting a Business -- Finance -- Types of Investors

Types of Investors

Angel investors are usually affluent individuals who provide capital for a start-up business. They do this usually in exchange for ownership equity. They are a great way to find financing to fill in the gaps between friends/family and venture capitalists. They seek a high return but are more likely to finance a business then a bank.

Venture Capitalist:

These are investors that provide capital for new, growing or struggling businesses. The investments are usually high risk but have potential for higher than average returns. These investors are usually large institutions with a large amount of capital to invest.

SBA Loans:

The Small Business Administration or SBA makes loans directly to small businesses and acts as the guarantor on bank loans. The SBA is the largest single financial backer in the United Sates.

Personal Funds:

Some individuals have the funds to finance their own business and are able to come up with capital that they have generated personally.

Community Banks:

Bank loans can utilized at any faze of a business and it is generally wise to use the bank that has been handling your personal financial situation. It is important to have a relationship with the local bank that you will be using, because they are more likely to assist in the funding of your business.