Prior to beginning work on this discussion forum, read Unit 3: Securing Capital from the course textbook Entrepreneurship: Starting and Operating a Small Business. Frame your reading with the view that obtaining financing for a new business depends on a mix of personal and business factors. For example, people uncomfortable with debt are likely to prefer equity financing rather than debt financing. Of course, personal preferences are affected by business factors. For example, those offering equity funding do not fund all business offerings and debt, or bootstrapping might be the only options available.

Review the funding sources listed in Exhibit 10-3 in the course textbook Entrepreneurship: Starting and Operating a Small Business. Assess your personal feelings about independent funding, debt funding, and equity funding. Select one source of funding sources listed in Exhibit 10-3 and then do the following:

• Justify your choice in terms of your personal feelings about sources of funding.
• Critique the responses offered by two colleagues and offer at least one business condition that will affect the colleague’s access to the preferred choice of funding. For example, if a colleague prefers debt financing from a bank, what is at least one business factor affecting the bank’s approval or denial of the loan your colleague must consider?

Offer a link to a video or an article that offers information about your preferred source of funding with an emphasis on the risks and rewards associated with the funding source. Think beyond the text. For example, offering friends and family an equity interest in a new business instead of debt has implications if the business fails. If bankruptcy occurs and assets are liquidated, creditors receive payment ahead of shareholders. How does this information affect your views about seeking funding assistance from friends and family?

References:

Glackin, C., & Mariotti, S. (2020). Entrepreneurship: Starting and operating a small business (5th ed.). Pearson.

Benjamin, G. A., & Margulis, J. B. (2005). Angel capital: How to raise early-stage private equity financing (Links to an external site.). Wiley.

Green, C. H. (2014). Banker’s guide to new small business finance: Venture deals, crowdfunding, private equity, and technology (Links to an external site.). Wiley.

Berman, E. (2018). Welcoming small business: When it comes to startups and entrepreneurial ventures, credit unions are discovering a demand for business funding (Links to an external site.). Georgia Trend, 33(9), 60–64.

Saulsbery, G. (2019, May 6). Finding funding: Why small businesses are leaning on fintech more than ever (Links to an external site.). NJBIZ, 32(18), 16–17.