Final answer:
The most common way for smaller businesses to cover short-term financing needs is through obtaining a bank loan, which allows the business to maintain control while meeting immediate cash flow requirements.
Step-by-step explanation:
For most businesses, particularly smaller ones, the most common way to cover a short-term financing need is to apply at a bank for a loan. A business loan serves as a way to meet immediate financial obligations without diluting the owner's equity. This is in contrast to using angel investors, where capital is exchanged for a portion of company ownership, or other forms of financing like grants or subsidies, which are typically less accessible for routine operational needs. Start-up firms usually raise financial capital through personal savings, bank loans, angel investors, or venture capital. Bank loans and issuing bonds ensure businesses maintain control but require consistent interest payments, while issuing stock transfers ownership to public shareholders and brings additional responsibilities.