Sources of Capital Research Assignment Paper

Sources of Capital
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Institutional affiliation
Sources of Capital
Raising sufficient capital to start a small business can be challenging at times. Entrepreneurs need to be careful when choosing the method of financing their small business ventures because some methods can have serious complications in the future. Sufficient funding is essential because failure to have enough money can lead to an early collapse of the business. One method of gathering resources includes donations from family and friends. Some people may seek the help of family members in raising the capital to start the business. Some family members will loan the money while others will give willingly expecting nothing in return. This style is advantageous because there is minimal or little pressure in returning the funds. Another method of raising funds is taking bank loans to finance the business. Banks all over the world have been known to offer business loans to small entrepreneurs. However, they have received criticism because of the high-interest rates that they charge customers. They are advantageous because they even provide advice for the business (Polytechnic, Omogbiya&Addah, 2016).
Venture capital can also be a source of finances for a start-up business. This is whereby the owner accepts money to sell some percentage of the business. This is mostly done by companies which have the potential to grow and become a big company. Wealthy investors tend to invest in these companies and have a certain percentage of ownership of the company and enjoy the profits while doing little or no work. In most cases, the investors act as the oversight as they make minimal decisions leaving a majority of the work to the owner. This financing the business can be advantageous to the owner because they get the money they...