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	Business Loan Small Business Loan Financing Basics Poor management is often blamed for the failure of many businesses. Part of the lack in management is related to insufficient business funding. When a business runs out of money what can be done? Often, applying for a loan is a long process that many businesses find that they cannot wait out. The best way to protect a business from inadequate financing comes from thorough planning and financial education. Underestimating the overall cost of borrowing, securing the wrong type of loan and miscalculating the amount required can have detrimental results to a business. There are several questions that a business owner should always know the answer to before attempting to secure funding through loans. First, a business owner must know whether the additional capital is necessary or if the existing cash flow can be managed more effectively. Basically, is there a definite need? Constantly looking into the future can help a business owner anticipate needs. By not anticipating needs, often a business must take whatever terms are available - not what is the best for the business. A business owner must be aware of the risks associated with the business. Being able to handle risks before they become critical situations allows a business to search for the best financing alternatives. Along with the risk management is the necessity of understanding where a business is in its growth process. In general, an owner must be aware of all of the little details that can affect financing. Anticipating what type of financial terms a business will be subject to can help in the preparation for financing. There are two types of financing - equity financing and debt financing. If a firm has a high ratio of equity to debt, debt financing can often be the best solution for financial needs. Experts advise business owners that have a high proportion of debt to equity to increase equity investments for additional funds. Debt financing is available for businesses through commercial lenders and the U.S. Small Business Administration (SBA). There are many programs available to encourage the growth of small businesses that are beneficial to their communities.  Most lenders offer debt financing in the form of demand loans, seasonal lines of credit and single-purpose loans for machinery and equipment. Though banks have traditionally been hesitant to approve long-term loans to small companies, the SBA has programs that help businesses secure loans. Equity financing is used by many small businesses as a way to fund what may be seen as risky business ventures. The most common source of equity funding comes from venture capitalists that are looking to invest in young companies. They are specifically looking for companies that have the potential of a public stock offering. The SBA can help businesses locate these investors. It is almost impossible to start and run a business without outside funding. By knowing your business and available options, you can make the appropriate decisions for the growth and success. Needing to secure a loan is nothing to feel shame about; even top companies like Apple Computer and Nike Shoes have received financing from outside sources that was critical to their growth.