Congratulations — you have an idea for a potentially lucrative small business. All you need is the funding. Several avenues are available, and you should take the time to explore them all before deciding what's best for you.
In case you missed the emphasis, the operative word there is best. With that in mind …
- When evaluating financing options, remember that it's not always about the interest rate. Terms and conditions matter quite a bit. Even as a C corp, S corp or LLC, you can lose what you've invested, and you may be asked for "personal guarantees" that will entangle you long after a business fails.
- Match the duration of your financing with the duration of your assets. If you have two-year loans with a big balloon payment at the end and you can't roll your debt in two years because of a major recession, that's a big problem. Ever hear of Lehman Brothers? Yeah, they did that.