Business Funding Secrets
Business Funding Secrets

Finding a Funding Source
for Business Financing


When looking for business funding you first need to have gathered and organized all of your information. It is amazing how many people call around looking for business loans, but then they can’t answer even some of the basic questions about the financial position of their own business.

 

Start by directing your search to Funders outside of the mainstream banks and lenders. With the use of the Internet it has become easier to find funding sources. By using keywords or keyword phrases in the search bar you should be able to narrow your search.

 

If the funding request is small there are auction sites such as www.prosper.com where companies can have individuals bid on the financing. For large transactions in the range of $50 million, and more, there are a number of worldwide Investment Bankers. (although some of these companies have had their own difficulties with the current economic crisis). If the transaction is geared more toward equipment and machinery, there are many leasing companies that can be considered. There is also a large network of brokers that have the inside track to private lenders. Paying a reasonable commission to a broker may save a huge amount of headaches, will save time, and may help the transaction avoid some of the pitfalls which will be encountered during the search for a funding source.

 

Funding sources tend to specialize in certain areas, so don’t contact a source that specializes in pharmacy finance, and request a loan for a hotel. Before you start contacting funding sources, ask the questions:    

           

1. Does this funding source accept deals that are similar to this funding request?

2. Does the funding source provide bridge loans, hard money loans, conventional finance, etc.

3. Does the lender provide factoring, or other cash flow stream type of funding?

4. What are the requirements for the Funder to even review the deal?

5. Is all the necessary documentation regarding the deal up to date and ready to be sent if the funder wants to take the next step?

6. What is the typical lead time for getting a transaction reviewed and funded?

7. If a broker is involved, does the Funder pay the broker fees or does the company requesting the funding pay the broker?

 

Tips:

1. Due to the current economic conditions, unless you are a large and well established company, some of the banks won’t be able to assist you.

2. When a funding source is found, many people start by asking what the terms and rates will be. These will be determined after the due diligence of the company’s data and credit history. With smaller companies the personal credit history and collateral may also be a                

3. Don’t provide financial statements that are outdated. To many downward things have happened over the past year. If the only financial statements you can provide a funding source are from last summer  - stop now and save everybody time and money.

4. There are many smaller and private finance firms looking for good deals. 

 

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