Investors For
Small Business -- Look At All Of Your Options
There are a
lot of lenders investors for small business, all sources for business financing: banks, Small Business Administration,
private angel investors, leasing companies, strategic alliances, venture
capital investors, SBICs, MESBICs, credit union coalitions, and many
more. But when a company is seeking financing, there never seem to be
enough funding sources.
Meeting the
Expectations of Lenders and Investors for Small Business
Investors for small business respond to business
plans that meet their specifications; they ignore the others. I repeat:
They ignore all the other business plans. T-r-a-s-h-e-d. Tossed. Caput. Not so much as a thank you letter.
Avoid the bottomless pit by
putting your plan into the right hands.
Your business plan must have
investors identified - before it is ever written. It doesn't matter how great a
company is -- if it doesn't fit the parameters of standard funding sources,
business loans and business grants will be out of reach.
Consider, for example, the
entrepreneur who has identified an excellent retail business in a thriving area.
For an investment of $100,000 this entrepreneur can generate a 20% annual
return. That sounds like a pretty good return on investment. Sadly, unless this
entrepreneur has real estate collateral or a rich relative, the odds of her
obtaining the $100,000 loan are really remote. The 20% return would only be
$20,000 annually -- an insufficient return to support her and repay the loan at
even a modest interest rate, and much too low of a return to interest venture
capital or angel investors.
She doesn't "fit".
Before devoting the tremendous time and
energy required for a business plan, first determine IF your company
"fits" the parameters for particular lenders or investors for
small business, and, if
so, which ones.
Here are two free charts to assist you in
making this determination:
First, the
Stages
of Development Chart. Find out how lenders and investors will
perceive your company. Not every type of lender or investor welcomes all stages
of development. Determine where in the matrix your company is likely to fit.
Second, the
Type
of Funding Chart. Review the qualifications for different
types of lenders and investors and find the best fit for your company.
There are a lot more types of business
loans than what are outlined in these charts. I have included only the most
popular types.
The key is to find the one that best suits
your company and your circumstances.
If there is no potential lender or
investor,
STOP. There is no sense in going any further until the lender or investor for
the business loan can be identified.
Also see:
Small Business
Administration.
This is one of the most popular means
of financing a business, especially a new business. The SBA has
multiple programs available -- everything from microloans to mentor-protege
programs for entering the big time.
Angel
Investor Networks
Angel groups are just that:
business angels. The money and expertise they bring to emerging
businesses is absolutely life-saving. I can't imagine a thriving
business economy without our angel investors.
Venture
Capital Financing
From small boutique venture capital
firms, to huge international conglomerates, there is hardly an industry
in existence that the venture capital world has not influenced.
Bootstrapping
Bootstrapping is way back in vogue,
although in truth it never went out of vogue. The proverbial garage may
be a bit overrated, but the techniques of successful bootstrappers are
very real.
Small
Business IPO
A full fledge public offering is
outside of our area of expertise, but the small business IPO may be
right on target for many small companies.
Business
Grants
Unique businesses qualify for business
grants from a myriad of sources, both government and private.
Alternative Financing
When none of the traditional sources
seems right, step into the world of alternative financing, where
anything goes.
Jog your memory with all the different
types and styles of investment. There should be one or two or
three that strike your fancy.
 |
SOUND OFF! Questions?
Comments? Looking for a bit of help? Got a good lead?
Come on by and share it. This is the place to help and be
helped, perhaps with a chuckle. |
Be sure to check out the Articles on
Business Finance -- there are some more gems there.
Few companies are financed entirely by
one means. Typically, it's a conglomeration of funding
sources. Perhaps a company starts out bootstrapping, but soon
applies for an SBA loan, or looks for angel investors.
Look to every avenue that may provide
capital when you look to how to finance a business. Sadly, it's not
always obvious. Sometimes even suppliers may be able to help out by
granting extended terms. Or a landlord can lower rent in the first
few months in exchange for a bit higher rent later.
Good luck in your search.
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