So you have the next big thing in the business world? You got the perfect business plan too. But you need at least $60 grand to get the ball rolling. You definitely don’t have that kind of cash on hand, so where do you get it from? Do you look to some venture capitalists, or perhaps some angel investors? Perhaps you could get some assistance from the government?
Here are some useful tips and information on business loans and investment for your business:
Start Early: Anticipate the need for the next round financing and start early. The process is probably going to take longer than you think, and it doesn’t hurt to be a little ahead of the curve. Locating and closing early round financing could take a quarter or two. Anticipating and planning ahead for your capital needs tells a story about you and your management team and avoids the smell of desperation. Desperation is invariably costly. Plan ahead for the best terms.
Work Your Network: Starting early allows for time to get your network working. Talk to your partners, bankers, your lawyer, your accountant, your friends the lodge or at the Chamber of Commerce. This will help you to assemble all the resources and knowledge that you can tap within your network.
Find an Angel: Angel Investors are typically wealthy individuals looking for a place to invest some of their money, and since they are investing their own money, they can be more flexible than institutional lenders. Look for Angels with experience in your business. They will be more likely to invest, they will invest more quickly, and an experienced Angel can bring far more than money to the table. The Internet has many Angel directories and organizations.
Do Your Homework: Are you looking for debt or equity financing? Know what you want. Know what you are willing to give up. How much equity are you willing to sell? How much control? Would you admit the investor to the board? Negotiations shouldn’t start until you and your team have broadly agreed to what you need and what is on the table to get it.
Use Preferred Lenders: The best source of debt financing for early stage startups is an SBA Loan Guarantee. The SBA doesn’t loan money, it provides banks guarantees. The SBA maintains lists of certified and preferred lenders. Using a Preferred Lender is beneficial because although the SBA does its own review of most loan applications, it does not do a separate review of applications coming from Preferred Lenders. You can find a list of Preferred Lenders, and a tremendous storehouse of other business information at the SBA website .
Polish Your Plan: Your business plan is the foundation of any search for new capital. The SBA website offers many tips on writing your business plan. It is always a good idea to have a well polished executive summary at the front of the business plan, as many of its readers will not read past the first few pages. After it's written, pick apart your plan as if someone was asking you to invest your money.
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