Where to Obtain Working Capital
Will banks or investors actually lend or offer money for that much-needed working capital or do you have to come up with it all on your own?
The Basics on Funding
Obtaining working capital through loans or investments is described in detail here. Learn about business borrowing options such as bank or Small Business Administration (SBA) loans versus investors in this great funding startup guide—great for business expansions too.
There are many types of SBA Loans from the 7(a) loan to the Patriot Express Loan to simple ARC emergency loans. Here you’ll get a roundup of every type of loan the SBA offers along with tips and advice on how and where to apply. What financial statements will you need to prepare and how many years of tax returns (both personal and business) are necessary for SBA loans? If you've got a question on SBA loans, chances are you'll find the answer here.
Patriot Express Loans
These loans for veterans and families of vets are available but how do they work, who is actually eligible and does your credit history affect the determination of the loan? While the government makes these loans seem like anyone can obtain these loans, some restrictions do apply and your credit worthiness and credit score are important as with any other type of loan. Take the guesswork out of whether you qualify for a Patriot Express loan in this great post.
The Controversy Over SBA Loans
Which bank claims the top spot in the SBA loan world and are these loans getting harder or easier to get? Learn the real facts behind these SBA loans and why they may be harder to get than you think. Time and again, questions and comments come in from our Bright Hub readers on why they can't obtain an SBA loan. Here we answer why these loans, while available, are very similar to going to your bank and applying for a conventional loan. It's also important to note the SBA does not loan money, only guarantees the loan up to various percentages depending on the type of loan.
Funding Ideas from Loans to Working With Existing Owners
Along with the SBA loan option find out what the possibilities of a simple bank loan and if buying an existing business, how to work with the existing owner to help fund the business in this guide to gaining cash for your startup. Some business owners nearing retirement will be willing to work with you by either financing part of your purchase price in a loan format or by staying on with a capital interest in the business until you can pay the purchase price in full.
What Banks Like
Before you apply for a bank loan for your business, do you know what they look for? Are they interested only in the business itself or do your assets or partner assets come into play? For example, if your credit is not so great, but your business partner's credit score is excellent, most banks will still loan you the money, although you may have to up the collateral a bit. This is a must-read post before approaching your bank for a loan.
What About Investors?
How much is your business worth in the eye of the investor? Here, find out what they look for and why market value and equity value are really two different things. It's true professional investors such as doctor or lawyer groups do like investing in real estate where smaller investors or the stand-alone investor may be enticed to invest via an exciting idea or product.
Are Investors Better Than Banks?
Is it better to approach a bank, the Small Business Association or simply find an investor to fund your business? Here, we’ll help you weigh the pros and cons of each. This can be a tough choice for some new business owners. Where investors may want to hold a higher percentage in the business say 70 percent to your 30 percent, banks can and will call in loans if your business defaults leaving you out in the cold. Learn how to make the smartest decision for your company here.
What’s the Best Way to Approach Angel Investors?
Angel investors are out there but tend to look at smaller, unique business startups. Find out the best way to approach them here to get the working capital you need. If your company is innovative, serves the community at large, or offers something no one else does, an angel investor may be interested in your product or service. Those businesses not so unique may have to skip the angel investor.
Obtaining funds via the venture capital (VC) avenue can be scary but here, we’ll walk you through the basics on using venture capital firms in simple, easy to understand terms. Is it true venture capital firms look at business who have gross profits in the millions? Do venture capital firms ask for a percentage of ownership in your business? Before you sign a VC agreement, learn what VCs want first and what questions to ask.
The Pros can Cons of Venture Capital
Is it really simple to gain working capital through venture capital funding or should you skip the idea entirely? If you’re unsure, this is a must-read, especially for new business owners or those looking for funding options when loans aren’t an option. Often it depends on the size of your company or the product or service you offer. For example large VC firms may only be interested in science, health care or educational companies to invest in and may skip the smaller independent pizza owner. VC firms can be tough to deal with so understanding the advantages and disadvantages is key before making a decision to try out this funding avenue.
Using Your 401(k)
Many the wannabe entrepreneur often consider using their retirement funds to gain the working capital they need. Will this work for you and is it a good idea? Will you have to pay taxes if you make an early withdrawal on your 401(k)? What other options should you consider before choosing this idea to take all your hard-earned money out of savings and place it into a business venture? What if the business doesn't make it? This post makes this tough decision easier.
Next, learn why you won't gain working capital from any source without a business plan!