As such, knowing where to borrow money for a business is vitally important to the success of your venture.

Before you start raising money, you should be aware of the variety of possible funding sources.

Generally speaking, sources for raising money fall into two basic categories: private sources, such as your local bank, and public sources, such as the federal government.

Private Sources of Investment Capital

Private sources of financing include personal sources (savings or loans from friends and relatives) and external sources (debt lenders, equity lenders and arrangements that combine debt and equity).

As you look to raise money for a new business, be sure to contact all of these sources of debt financing, if that is what it takes. Start with friends and family first as that will be the easiest source of capital.

Government Funding to Start a Business

In addition to the private sources listed above, there are a number of government financing sources that may be available to you and your business. A government agency may be interested in financing new businesses that will have a direct impact on the agency or the client population it serves.

If your business produces a product or service that you think a government agency would be interested in, contact the government agency directly and request information and applications for grants and other possible business development resources the agency may control.

Money from the government to start a business can be yours, but it does take some work to understand how to get it.