Financing Sole Proprietorships

A sole proprietorship is a single-owner business and the simplest form of business entity. However, a sole proprietorship is also the most restrictive form of organization for equity financing because the equity investment is limited to whatever personal funds you are willing to put into the business. Those funds may be already available in your personal financial portfolio from simple savings accounts at banks to ownership of commercial real estate or you may need to borrow more money and contribute those funds as an equity investment in your business. Debt financing for startup sole proprietorships is also typically limited by the amount of personal assets that the entrepreneur has available to pledge as security for a loan.

Among the advantages of a sole proprietorship are:

Disadvantages of a sole proprietorship include: