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​Sound financial management is likely to be the key to your business' success. Whether you're starting, buying, or expanding, minimizing financial risk is crucial. There are a number of resources available to help you. The US Small Business Administration is a good place to start with Understanding the Basics.

When starting out, personal savings, money from friends and family, and some form of loan or credit are the most common forms of financing.

But before you can secure a bank lender or investors, you need to develop a business plan and understand cash flow statements, balance sheets, and income statements. In many cases, business owners will be asked to provide 15 to 25 percent of the total amount of funding that they are seeking through loans. Business owners also may be asked to provide personal guarantees and pledge personal assets. Loans are often secured by some or all of the assets of the company, such as equipment, real estate, inventory or accounts receivable.

Besides personal savings, below are some of the most common ways to secure financing to start or expand a business.


In addition to banks and other creditors, Kentucky offers financial assistance to small businesses through a number of programs to encourage new venture formation, business expansion and job creation. Supporting entrepreneurs helps the Commonwealth achieve long-term economic growth and employment for its citizens. The U.S. Small Business Administration is also equipped with programs designed to assist business development.  Starting your business may require financial assistance through banks, credit unions or other investors.  Make sure you get assistance from an institution that is sound and safe.  Consult the Department of Financial Institutions for information about state-chartered banks, credit unions and for business startups such as mortgage lenders or securities investment firms.


Kentucky's pro-business climate provides a number of incentives for businesses. The Cabinet for Economic Development administers financial support through an array of financial incentive and tax credit programs designed to encourage economic development, business expansion and job creation.

Equity Financing

Equity financing is a tool that allows some companies to raise capital in exchange for a share in ownership, typically in high-growth or emerging industries. Equity investors want to earn a high rate of return on their investment in the firm and then sell their ownership interest, hopefully at a significant profit. Therefore, an investor exit strategy is an important component of any equity financing strategy. Here are some more resources to learn about equity financing and venture capital. Kentucky offers several funding programs to assist high-tech companies with significant growth potential.

Training Incentives

The importance of a skilled workforce has never been greater. As companies think globally, it's vital that Kentucky's workforce be prepared to meet the hiring demands of employers. The Kentucky Skills Network offers a variety of flexible funding options to help companies make skills training more affordable.