Sources of Agriculture Financing
Sources of Agriculture Financing
Financing is needed to start a business and ramp it up to profitability. There are several sources to consider when looking for startup financing. But first you need to consider how much money you need and when you will need it.
The financial needs of a business will vary according to the type and size of the business. For example, processing businesses are usually capital intensive requiring large amounts of capital. Retail businesses usually require less capital.
Debt and equity are the two major sources of financing. Government grants to finance certain aspects of their businesses may be an option. Also, incentives may be available to locate in certain communities and/or encourage activities in particular industries.
Equity financing
Equity financing means exchanging a portion of the ownership of the business for a financial investment in the business. The ownership stake resulting from an equity investment allows the investor to share in the company's profits. Equity involves a permanently investment in a company and is not repaid by the company at a later date. The investment should be properly defined in a formally created business entity. An equity stake in a company can be in the form of membership units as in the case of a limited liability company or in the form of common or preferred stock as in a corporation.
Companies may establish different classes of stock to control voting rights among shareholders. Similarly, companies may use different types of preferred stock. For example, common stockholders can vote while preferred stockholders generally cannot. But common stockholders are last in line for the company's assets in case of default or bankruptcy. Preferred stockholders receive a predetermined dividend before common stockholders receive a dividend.
Personal savings
The first place to look for money is your own savings or equity. Personal resources can include profit-sharing or
Financing is needed to start a business and ramp it up to profitability. There are several sources to consider when looking for startup financing. But first you need to consider how much money you need and when you will need it.
The financial needs of a business will vary according to the type and size of the business. For example, processing businesses are usually capital intensive requiring large amounts of capital. Retail businesses usually require less capital.
Debt and equity are the two major sources of financing. Government grants to finance certain aspects of their businesses may be an option. Also, incentives may be available to locate in certain communities and/or encourage activities in particular industries.
Equity financing
Equity financing means exchanging a portion of the ownership of the business for a financial investment in the business. The ownership stake resulting from an equity investment allows the investor to share in the company's profits. Equity involves a permanently investment in a company and is not repaid by the company at a later date. The investment should be properly defined in a formally created business entity. An equity stake in a company can be in the form of membership units as in the case of a limited liability company or in the form of common or preferred stock as in a corporation.
Companies may establish different classes of stock to control voting rights among shareholders. Similarly, companies may use different types of preferred stock. For example, common stockholders can vote while preferred stockholders generally cannot. But common stockholders are last in line for the company's assets in case of default or bankruptcy. Preferred stockholders receive a predetermined dividend before common stockholders receive a dividend.
Personal savings
The first place to look for money is your own savings or equity. Personal resources can include profit-sharing or