When we're enjoying a buoyant business climate numerous other options can come into the picture.
These include mainly overseas banks, investment syndicates, acquisitive plcs and conglomerates eager to diversify into tempting new pastures. In less benign times these peripheral players tend to draw in their horns, leaving the market to the truly committed.
But before you start flicking through Yellow Pages in search of a few million pounds to prop up your business overdraft, it's worth remembering that the banking and corporate finance industry is not new.
It's highly unlikely that your proposal for raising capital for your small business will seem as exciting and novel to a corporate financier as it might to you. Those of us in the sector spend our working lives sifting through small-business finance proposals of every imaginable kind.
Expert
Of course, it's impossible for us to be experts in every sort of business and we certainly won't claim to be omniscient.
What we do have is a firm grasp of the essential mechanics of any business. Is turnover growth achievable? Can margins be sustained and the overhead cost base controlled? Is the level of capital expenditure adequate and are the working capital assumptions realistic?
Your proposal for small-business finance should provide clear, succinct answers to the essential questions, and forecasts should be realistic and pragmatic.
There is no point in hiding anything in an array of impressive looking figures. If the proposition is flawed, you can be sure it will be detected.
Venture capitalists and bankers don't like shocks and surprises. They go to great lengths to make sure that you won't be able to spring any on them.
So, make your proposal for small-business funding straightforward and accurate. Ultimately, the success of the application for capital will rest on how much they trust the contents.
You will find that neither experienced institutional investors nor business angels are keen to part with substantial sums unless they gain a measure of control of the business they are investing in.
At the very least, they will want to put themselves in a position where they can keep a very close eye on their money.
It's very easy to end up as a minority shareholder in what was formerly your own business and it may prove very difficult to regain majority control again after it becomes successful.
The venture capital market, proper, is populated with astute, sophisticated and prudent managers who devote their careers to producing acceptable returns on carefully managed funds.
Try to bear in mind that there are plenty of alternative ways in which these funds could be profitably deployed: the stock market, gilts, government bonds, secure investments, property, precious metals, antiques and old masters, to name but a few.
Greater return
It follows that those involved in the risk-capital market will be expecting a greater return than they would expect from a more predictable investment.
They will also be extremely practised at analysing the available information about both a proposed venture and those who are managing it (or plan to manage it).
Venture capital professionals do not suffer fools gladly nor channel funds into suspect endeavours. They provide financial tools with which business people can get on with the job of making profits.
The funds they manage are not theirs. They are entrusted with the safe management of capital because they have demonstrated their skill and success in doing so over a period of time.
Having said that, the venture-capital market is worth billions of pounds a year in the UK alone.
It is a competitive market-place and if you have a promising proposal for small-business finance, a sound business rationale and good credentials, there should be no shortage of eager equity investors.
Risk
In return for putting their money at risk, these investors will probably expect a significant share in the ownership of the business in question - albeit temporarily.
They will also require various checks and controls to be put in place and quite probably a voice on the company board.
If the equity house itself is not directly represented, they may well nominate a trusted non-executive director to monitor the conduct of the company's affairs on their behalf.
Most equity investments have a pre-planned exit route built-in. When the venture prospers they will be happy to make a timely withdrawal, relinquish control and profit from the increased value of their shares.
