It’s very helpful to understand the role that corporate structure plays in financing your business. Before you begin any efforts to raise capital for your business, you should have a good understanding of how corporate structure can impact your approach to fundraising.

Sole proprietorship

This is by far the most popular corporate structure, and it’s the one that most small business owners adopt. To finance a sole proprietorship, you’ll have to maintain an excellent personal credit profile, so that you are eligible to qualify for loans. When you do apply for loans, you’ll be required to commit personal assets in order to be approved.

Partnerships

There’s a bit more flexibility involved with financing for partnerships, primarily because it’s easier to qualify for a business line of credit or loan using the credit profile of your business. While lenders will still evaluate the credit history of each person involved in the partnership, it will be possible to raise funds through alternative methods such as equity financing.

Corporations

When a business is incorporated, it provides a certain amount of protection for the owners and separates them legally from the business itself. This corporate structure also has the advantage of being able to seek funding through angel investors or venture capital funds, which provide financing to corporations in the early stages of their growth.

Limited liability companies

This kind of corporate structure combines elements of a partnership with that of a corporation, and can be operated either alone or in tandem with other owners. All owners of a limited liability company are protected against personal loss from business liabilities, all the same financing options which are available to sole proprietorships and partnerships are also available to limited liability companies.

Raising capital for your chosen corporate structure

Once you’ve decided on the corporate structure which works best for your business entity, you will have certain options available to for fundraising. One of those options should include partnering with JNI Lending, and if you contact us to discuss those options, we may be able to provide financial solutions to your business needs.