Most businesses need capital outlay before they can really get going; this is generally
to buy equipment, materials and stock, as well as to pay salaries, rent, telephone and other
expenses until the business becomes profitable.
There are three basic options of acquiring the needed capital:
• using own money,
• borrowing from others, i.e. getting an informal loan from family or friends, or a formal loan from a lending institution like a bank
• getting others to invest in the business.
In a situation where funding has to be sourced from a lending institution, a comprehensive and well-motivated
business plan is required, which will show a thorough understanding of the existing or proposed business,
the goals and objectives of the business owner, as well as the financing requirements.