Business Funding Secrets
Business Funding Secrets

Small Business Loans

by Brad MacLiver, authorship and profile at: Google

 

The Project Corporation  is a business loan  and venture capital consulting firm. We typically handle transactions of $1 million or more. However, we do receive numerous calls concerning small business loans.

 

My standard response to small funding requests is:

 

1. The client needs to approach their local bank where they already have a banking relationship. If the loan is for a new business it will probably be turned down because banks typically look for a financial track record of at least 2 years.

 

2. If the business loan from the bank doesn't work, the client may need to pursue a personal loan. This is usually secured by a home equity, or other personal property acceptable to the bank.

 

3. Credit cards are an option, when a person is diligent about keeping their eye on the rates. There are some very attractive teaser rates. As you know these rates may last 6 months and then take an extreme bounce skyward. A client can use the credit card company's offers, if they watch their step. A business owner whois negligent about keeping track of the rate hikes, could put themselves in a position where they won’t be able to obtain the better bank financing later when their business is expanding.

 

4. Many small businesses that are growing need to purchase new equipment, so equipment leasing is always an alternative.

 

5. Family and friends can always be considered as a source of funding. 


There is now another alternative for a business needing $1,000 to $25,ooo.

 

Everybody is aware of e-Bay and the bidding process that takes place for products. An online service is now providing loan services with the bidding concept.

 

This bidding service is provided by www.Prosper.com. This is a web site where you can borrow money directly from other people who have money available to lend. This is a great alternative to consider when the bank says no.

 

Someone needing a business loan can set up an account and request funds from $1,000 to $25,000, along with the interest rate they are willing to pay.

 

Clients will be required to provide their personal information and a credit check is done. Debt to Income ratio is calculated and presented to the public.

 

Should a Client default, Propser.com does report them to the credit agencies and the loan is put into the collection process.

 

A Lender may be someone who has an additional $500 and wants to receive a better return on their money than where they currently have it placed. They can split their $500 into $50 segments and contribute to 10 different loans. This diversifies their risk. If one loan defaults they still have 9 others paying interest.

 

The final amount received by the borrower may consist of multiple lenders each providing some of the funding. Prosper.com then tracks the loans.

 

Different groups can be set up to target specific niches, or where people with similar funding needs, can group. Each group is rated according to the performance of its members. If you are a member of a group where everyone pays on time, your group rating will be higher and you should be able to obtain a better interest rate than if you listed your funding request by yourself. Each group has their own policies and a group leader for approving or declining a funding request.

 

Clients that need a small business loan now have an alternative to banks, credit cards, and family.

 

Personal Note: People with small funding requests can be funded by other individuals they don’t know and most likely will never meet. This is a person to person lending situation, and people requesting funds should respect and appreciate the opportunity these other individuals are providing. There are always the jerks in life who will try and take advantage of any situation, don’t be one of them, or allow someone you are working with to be one.


 

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Disclaimer

 

Neither The Project Corporation nor the Business Funding Secrets Newsletter has any association or affiliation with Prosper.com, their policies, or their procedures, and no intent is implied that a funding  request will be funded through their system, or process.


Please click on the following link to read more about Prosper.com 

 

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