 Do
you need money for a new business or need money to expand an existing
business? Then you have come to the right place to find money for your
business. Finding money for your new or existing business may not be as
hard as you may think. Once you finish reading this article on
finding money for
you new or existing business you will be see how simple it can be...when
you know where to look and how to do it.
Do You Need Money To Maintain Your Cash Flow?
It is the lifeblood of your business. You've probably lived through this
scenario on more than one occasion: It's the end of the month, the bills
have been paid, and you let out a sigh of relief because you are tain
the black. Good cause for celebration. But it didn't happen by chance.
It happened only because you questioned every invoice and cut every
expense to the bone; because you checked your accounts receivables
against your accounts payables and compared that to cash on hand in a
daily monitoring of your company's financial picture. You know that even
a slight miscalculation can tip your business across that
not-so-imaginary line and put you into the red.
Do you need Long-term Capital
You need money to help you develop and introduce new products or
services, to expand your facilities, add new hires, and more. Without
long-term capital, your business will struggle to grow and evolve, while
the rest of the world passes you buy.
Where To Find Money
Businesses that thrive
know where to find the money to finance their operations. Here are
some of the most common sources:
- Self-financing:
If you put your own money into your business, you're not alone.
"Overall, small firms rely more on owner capital and less on external
debt than larger firms," reports the Small Business Administration.
Common sources include personal credit cards (39.1%), business credit
cards (27.7%) and other owner loans (16.5%), including home mortgages
and home equity loans. Others tap life insurance cash values or sell
assets to find funds.
("The
Facts About Small Business, 1997," Small
Business Administration)
The drawback:
This breaks the "OPM Rule" (use other people's money). It also may put
a strain on your overall financial situation. Most of all, especially
if you use your credit cards, you can pay a premium for the money you
need.
- Private Financing:
This could be known as the "family and friends" plan. You approach
every relative or associate who even hinted that it would be exciting
to put cash into your business. You can offer them either equity
(partial ownership) in the business or pure borrowing, with a plan to
repay. Either way, be sure to (1) put everything in writing, even with
blood relatives; (2) if you offer equity in the business, insist that
your backers become limited partners (not general, active managers in
the business) and (3) have your attorney draft the terms.
The drawback:
You may have to kick in part ownership in the business or offer such
generous repayment terms that it will be years before you get out from
under.
- Venture firm financing:
These small business investment companies (SBICs)
lend money to businesses with solid potential. The key is to have a
professional looking proposal that details exactly why you need the
money and how you will use it. These companies are licensed and
regulated by the Small Business Administration.
The drawback:
Venture firms are in the business of providing financial backing...and
they will drive a hard bargain. They will also take their time
exploring every aspect and detail of your business. Finally, if things
don't go as projected, you could lose your company.
- The government:
Depending on the nature and location of your business, there may be
grants available or loans from the SBA. For information, visit their
web site at www.sba.gov.
The drawback:
There is red tape and no guarantee that you will qualify. While grants
are free money, loans are secured by business and personal assets.
Finally, there are lending limits.
- Your financial institution:
Many people mistakenly believe that their credit union or bank is only
a source for personal funds. However, you may be eligible for
financing under a number of options. Very often, only a signature loan
is required. Contact your lender and set up a line of credit that can
be tapped instantly when needed.
The drawback:
Standards can be tough. The key is to establish a working relationship
with your commercial lender in advance. That way, when you need
capital, it will be available quickly. Policy loans will affect the
death benefit.
The best source for financing is the one that helps
you achieve your objectives with a minimum of risk and allows you to
retain control of your company. Only borrow when you have a specific
plan for using the money...and a plan for repaying it.
Consult an Agent
At no charge to you, a professionally trained and experienced agent can
help you analyze your needs and recommend appropriate solutions through
insurance and financial products and concepts.
Click
here to request a no obligation review with a New York Life agent.
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