Forms of Short-term Financing/Personal Resources
Startup companies have difficulty raising money until some performance history is created. Prior to the establishment of solid financial data, a startup is dependent upon the personal resources of the owner or investors in the company. Private investors expect to have a return on their investment and the ability to sell that investment at a future date. The owners raising capital from private investors give up a portion of their business in the form of an equity interest to the investor, which dilutes the holdings of the existing owner(s) of the company. Banks always expect owners and investors to step in with additional funding first before increasing credit lines in emergency situations.