Equity finance Loans, how to apply for it? If you own a business and want to see it grow there is nothing more frustrating than knowing that the only thing that separates your business from success is money. Having a great idea and being too cash-strapped to make them work is a common problem with new entrepreneurs. This article gives you some great ideas on how to jumpstart your business with equity finance.

Hold your horses, what does equity finance mean again? Equity finance is a form of finance where business raise cash by selling a share in the company. The size of the share and the amount of day to day control that is sold depends on the specific equity finance loan signed by the participants. In fact, calling it a loan is a bit of misnomer as it does not accrue interest or ever have to be repaid. It is a simple sale of a share of the property for cash. You could call equity finance the stock market for poor companies. Launching a company on the stock market is both expensive and riddled with requirements that require time, money and expertise to carry out. Applying for equity is in comparison easier and much cheaper to do. When you apply for equity finance you will generally be dealing with businessmen that specialize in investing in small the medium companies like yours. They will not be so interested in what security your company can provide for their investment as in the potential for profit your company possesses.

Step 1. Examine your needs as a business.

This seems an obvious step, but be as a detailed as you can. It’s not just a case of “I need money”. Ask yourself, how much money do I need? How much control am I willing to give away? What expertise do I require, if any?

The answer to these questions will help you decide what kind of finance you need. If you only need a little cash, thousands and not hundreds of thousands, a personal or business loan might suffice. If you need a lot of cash and don’t want to let go of any of the day to day control you might be better going the venture capital route. Venture capital firms tend to simply invest in companies with high potential and leave the day to day management to the founding owners.

Step 2. Prepare a good business plan and present it well.

Choosing the equity finance route when looking for cash instead of asking a bank for a loan does not mean you should be less professional. If anything you should be more professional in you presentation of your business plan and the impact you feel the extra investment will have in your business.

Remember to be realistic, know your facts and how to explain them. When you present your business plan to an equity finance board of investors you will be talking to experienced business men that will probably have started their own business from scratch many times over. They will have insightful questions and suggestions that you must be prepared for.