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There are a number of options available for funding a new start up business: line of credit, credit cards, business loans, P2P loans, and so forth. Each is weighted with its own pros and cons. Let’s briefly take a look at each of these options, and consider whether they are right for you.

The first is a start up business line of credit. The line of credit is a form of revolving credit, meaning that it is a bundle of credit extended with a maximum balance that can be spent at the will of the customer. The credit line contains an interest rate, which much be paid each month on the remaining balance. This type of credit is issued by banks and comes in the form of a checkbook, which is directly tied to the bank-issued credit line. Generally smaller banks and credit unions are more ideal for a start-up business line of credit, since larger banks tend to be less enthusiastic about taking on the unnecessary risk of these customers.

Next we have credit cards, which are very common and well-understood. Business credit cards work very similarly to personal credit cards, except they reflect the credit of the business rather than an individual. They also tend to have much larger balance, and carry higher interest rates. Start-up business credit cards are challenging to find, but are excellent credit building tools and very commonly accepted in the business world.

Business loans are, of course, a very common way of accessing capital quickly. Getting a start-up loan can be challenging and may require a bit of comparative shopping. Like a start up business line of credit, you are probably going to be better off shopping at smaller banks and credit unions rather than larger banks. You may also want to consider Small Business Association loans, which are backed by the SBA and help start up businesses, veterans, and minorities with their business financing needs.

Another common form of start up business financing is the financial support of friends and family. Though antiquated, this form of financing is perhaps the oldest and still remains a very useful tool today. People taking this route are encouraged to check out, a website that provides the business and legal tools for helping friends and relatives conduct loans in a professional manner.

This Business article was written by Mark Karavan on 11/29/2009