If you are thinking of finding private investors for your startup of a small business, the current recession will make your efforts more difficult. Many private investors are very wary of investing in new businesses, but there are ways if you have a solid business plan, good credit and find the right investor.There are many stories of great wealth that was created during hard financial times. The bad economy has, understandably, greatly reduced the number of people launching new businesses. There are people that are still willing to invest in small business start ups because the potential return on their investment can be significantly higher than what a risky stock market can produce.The kind of private investor that will be willing to lend money during a recession is will probably require that the business plan be nearly bullet proof. Placing an ad like the title to this article is likely to not be very successful. A small business entrepreneur looking for private investors will need to seek out the investor rather than just hoping that they will respond to an ad.There are many ways to find investors and the type of business that is being started will limit the possibilities. One of the best places to go for a business loan would be to a small commercial bank. Oftentimes, small commercial lenders have more wiggle room in lending requirements than larger regional or national banks have. Getting a loan from a bank, however, will require significant assets pledged as security for the loan. Small banks will often require that the borrower give a personal guarantee which will increase the financial exposure for the business owner.There are also lending clubs that can be found that pool the resources of numerous private investors to provide loans to small business owners. These lending clubs can be found on the internet or through referrals from other business owners or business investment firms. There are also venture capital firms and angel investors that will invest in small business start ups, but these investors will want to be involved or at least monitor the start up of the business to make sure that their investment is safe. The cost of these types of loans can often be high, but the right investors will often be a huge asset as their desire to protect their investment may also increase the business’ chance for success. Angel investors and venture capitalists are often not shy in offering advice if it will protect their investment.One of the best ways to get a private investor for a small business start up is to find an investor that will be willing to be a partner. This partner can be a silent partner or can be involved in the business, but such an agreement should be put together by an attorney so that the business owner can have a buyout option once the business is successful. Giving up equity in a business start up is often difficult for a budding entrepreneur, but it may be the easiest way to find money to get a new business up and running.Placing an ad that says “Private Investors For Startup Small Business Wanted” is not likely to be that effective in a difficult economy. Once a solid business plan has been completed, the future business owner should plan to spend a fair amount of time seeking out investors for the new business. Selling the plan to the future investor may be the most difficult part of starting the business, but the efforts will hopefully pay off and result in a post recession boom for the business owner and the investor.
As a small business owner you face a variety of different financing options. Some of your choices include finding investors, pulling out business loans and applying for government grants. This article is going to address the latter two of the three previous options and discuss what you as a small business owner can do to secure additional capital for your business.LoansLoans are borrowed funds that your business will have to pay back, usually with additional interest. They are the most widely available resource for small business funding and are worth mentioning in this short article. The U.S. Small Business Administration currently has three different loan programs for small companies and businesses; the 7(a) Loan Program, the Microloan Program and the CDC/504 Loan Program. Each of these government-sponsored programs is designed for a specific purpose and is available to businesses that meet the standards and requirements of each respective program. More information regarding these business loan programs can be found on the SBA website under the Loans & Grants section of their website.Aside from the previously mentioned government loan programs, small business owners can decide to obtain funding from local financial institutions. Most financial institutions offer a wide variety of business loans with varying interest rates and monthly payments. Common types of business loans include loans for real estate, loans for company equipment and loans for the vehicles you use to perform company services and activities. Each of these loans has the potential to benefit your business in a variety of ways and the usefulness of each loan depends on the type of business you own. Most financial institutions have a portion of their website dedicated to businesses and typically provide information on the type and availability of their loans within this section. If you feel more comfortable meeting someone in person and shaking a hand, most local banks have a dedicated staff for small business owners. They’re always more than happy to help.GrantsGrants are fund that you typically don’t have to pay back. Naturally, this is the type of funding most businesses want to get. The government is one of the largest and most sought after sources of small business grants. Many business owners naturally look to the government first when applying for grants and funding.The thing that most new business owners don’t realize about government grants is that they’re highly regulated and often hard to get. Due to the fact that our tax dollars pay for business grants, the federal government only offers grants to companies that conduct specific types of business. Companies that conduct research and development, non-profit organizations and certain educational organizations are examples of businesses that the federal government is authorized to give grants to.If you’re a business and you’re looking to find a grant, your best option is to see what your local and state governments have to offer. Many times your State appropriates funds for small businesses and provides grants for companies that support a specific cause or agenda. For example, in recent months there has been an increase in government funding for businesses pioneering clean energy and childhood education.While grants are much harder to acquire, it definitely feels great when your business qualifies for one and is accepted as a recipient of a government grant. Some grants will provide your business with cash with a few additional stipulations and others will require your business to match the amount they give with your own capital. The truth is, almost all grants are different so it’s hard to describe how each of them works. The types of grants available within each state vary significantly, so your best bet at finding grants that are appropriate for your business would be to search your state or local government’s website for the information.