Basic Principle of Financing

Poor management is often referred to as the main factor of why businesses fail. Lacking or poorly timed financing is a nearby second. Whether you are a starting up business or expanding your business, adequate capital is important. Yet it is insufficient to essentially have enough financing; understanding and planning are necessary to control it well. These qualities will ensure business owners to avoid mistake like having a wrong type of financing, or underestimating the cost of borrowing money.

Ask yourself this question before inquiring about financing:

  • Do you need more capital or can you work on with your existing cash flow?
  • How do you characterize your need?  Do you need the money because you want to expand? Or as a cushion against risk?
  • How vital is your need? You can get the best terms when you foresee your needs rather than looking for money under pressure.
  • How big is your risk? All businesses suffer from risks and danger, and the level of danger will influence expense and accessible financing plan B.
  • How strong is your management team? Management is the most important element surveyed by money sources.

Possibly most importantly, how does your need for financing mesh with your business plan? If you don’t have a business plan, make writing one your first priority. All capital sources will want to see your plan for the start-up and growth of your business.

Don’t assume all money is similar

There are two types of financing: equity and debt financing. If you are looking for money you should consider your business debt to equity ratio – the difference relatively concerning dollars you’ve borrowed along with dollars you’ve invested in your organization. The harder money masters include invested in the organization, the more it really is for you to entice loan.

If your company has an excessive percentage of equity to debt, you may want to seek debt financing but if your company has a high percentage of debt to equity, experts say you should increase your ownership capital for added funds. In this way you will not be over-leverage to the point of ruining your company’s welfare.

Equity Financing and Venture Capital

Most small scale businesses use limited equity financing but with debt financing, additional equity mostly come from non-professional investors like friends, relatives, employees or customers. However, the most common source of professional equity funding comes from venture capitals. These are institutional risk takers and may be groups of wealthy individuals, government-assisted sources, or major financial institutions. Most specialize in one or a few closely related industries.

Venture capitals are sometimes seen as deep-pocketed financial gurus looking for start-ups in which to invest their money, but they most often prefer three-to-five-year old companies with the potential to become major regional or national concerns and return higher-than-average profits to their shareholders. Venture Capitals earn money by owning equity in the companies it invests in. They generally prefer to influence a business passively, but will react when a business does not perform as expected and may insist on changes in management or strategy. Changing some of the decision-making and some of the potential for profits are the main disadvantages of equity financing.

Debt Financing

Banks, savings and loans, commercial finance companies, and the SBA are some of the sources for debt financing. State and the local government have come up with programs in the recent years to give encouragement to the growth of small business to help increase the economy. Family members, friends, and former associates are all potential sources, especially when capital requirements are smaller.

Banks traditionally have been the major source of small business funding. Their main role has been as a short-term lender offering demand loans, seasonal lines of credit, or single-purpose loans. Banks generally have been unwilling to offer long-term loans to small firms. The SBA guaranteed lending program encourages banks and non-bank lenders to make long-term loans to small firms by decreasing their risk and leveraging the funds they have available. The SBA’s programs have been an integral part of the success stories of thousands of firms nationally.

In addition to equity considerations, investors or lenders mostly require the borrower’s personal guarantees in case of default. This will assure that the borrower has a sufficient personal interest at stake to give attention to the business. For most borrowers this is a burden, but also an obligation.

More detailed information and useful advice can be found at Created by Mark Favre, it offers expertise and assistance with developing and funding your concept, including a private forum for queries and discussions. If you need access to investors and funding providers, please do check our
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Guidelines For Successful Postings

Guidelines For Successful Postings

Rules and Guidelines For Successful Postings

Posting your Funding request is essential part of raising capital as creating your Business Plan. In order for you to get the funding you should be able to catch the eyes of the investors. Here are some tips you can follow to attract Investors and funding providers.

Title. Make your title attractive this is the first section our investors will see. Include the title of your business or invention. Make it enticing and give them something they want to hear and continue reading to your letter.

Posting. Write a short summary of your Business idea or Invention that will catch investor’s attention. Make it 2 to 3 paragraph short and make it concise and simple. Avoid too much information and do not copy and paste your Executive Summary. Your posting is not to be confused with a chat or blog. You are selling you and your business to investors and funding providers to raise capital and any posting that is not about your business is not allowed. Remember, concise and to-the-point.

Attach your Business Plan or Executive Summary. If you are looking for an Angel Investor or Venture Capital make sure you attach your Business Plan don’t wait for the investors to ask your Business Plan. Remember your Business Plan is the eye view of your business/invention.  If you don’t have a Business Plan yet at least upload an executive summary.  (You can use the Free Executive Summary template available upon creating your membership). This will give the investor the immediate reaction that you are serious in getting funds.

Private or Public posting. We have two ways of posting your request either public or private post. If you publically post be aware that everyone who not a member of will see your postings. While private posting only our registered investors and funding providers can see your funding request.

Avoid Personal Information. Even though we pre-screen funding providers, it is an ever increasingly large group and it is ultimately up to you to protect yourself from anyone saying who they are not and promptly reporting any concerns to us. Therefore we suggest not putting your email or telephone number on a public post. Private postings may not have the traffic like a public posting but is limited to our investor network that is viewing your funding request. Keep in mind that if there are investors that are interested in knowing your business venture they can always email you via and you will receive an email notification on your personal email if they replied on your posting.

Be patient for responses give some time to our investors to see your request. If you are not getting any responses try to re-write or revised your posting. You may also call us and we can look at your posting and give you tips for success.  Try to be more creative and remember you want to create interest in your business or idea and sometime it takes time for investors and funding providers to notice you, especially the right one that will fund you.




Educate Your Investors: Effective Ways to Secure Business Funding

Educate Your Investors Effective Ways to Secure Business FundingSecuring the nod of potential investors such as angel investors or venture capitalists is not an easy job. Most of the time, they have the money but they are not familiar with the industry that your working for. Prior to pitching your startup, it is important that you have some idea on how you will respond to the queries of your potential investors.

Be ready to answer questions such as: What is the scope of your industry? Why should I invest in your company? How much will I get when I fund your business? What is your edge over other companies?

Being prepared to answer such questions will greatly improve your chances of securing business funding. The key is simply to make the investors understand your industry and where you are coming from. If you do that, there is no doubt that you will be able to get the venture capital that you really need.

Aside from being able to respond to the questions thrown at you, you should also try to observe the following tips on how to effectively educate your potential investors about your industry:

1. Explain your industry in a familiar manner – It is important that your potential investor understands your industry. And you can only do that by explaining it to him or her using a familiar context. For instance, if your industry is something that concerns e-commerce, then you might want to explain it by using a relatively known concept such as trade or marketing.

2. Avoid jargons – When talking about a concept that we are knowledgeable of, Continue reading “Educate Your Investors: Effective Ways to Secure Business Funding”

Secure Business Funding with a Winning Business Plan

Secure Business Funding with a Winning Business PlanA business plan, by definition, is a piece of document that provides details on how a company should function. For some, a single sentence detailing an objective of the startup can be considered as a business plan. This, however, is not the type of plan that a business owner would want to present to a potential investor. So what makes a winning business plan that could assure financial support from potential investors?

To answer this, we must first enumerate and define different types of business plans that an owner can use for different purposes.

1.      Mini-Plan

A mini-plan is a short document that is used to test a business concept or pique the interest of a potential investor or partner. It usually runs from one to ten pages, depending on the type of the business, and contains all key elements and aspects of the company.

A mini-plan is not intended to be a substitute for a full plan. Instead, it can serve as an outline or introduction to a full-length plan that will be produced later on. This plan is definitely not the type of document that you would want to send to a potential investor.

2.      Working Plan

If you are a business owner who want to increase the productivity of your company, then you might want to consider writing a working plan that could complement a well-written mini-plan.

Unlike the mini-plan that is limited to all the key aspects and elements of the company, a working plan is mainly focused on the details of the operations of the company. Continue reading “Secure Business Funding with a Winning Business Plan”

The Importance of Business Plans

business plan

Business plans are not just for startups that are in search of business funding. In fact, a lot of experienced entrepreneurs spend considerable time writing and revising their plans. The truth is, as long as you’re in the field of entrepreneurship, business plans should always be one of your priorities.

Writing a business plan is not easy. Most of the time, business plan writers will have to look into the every aspect of the company in order to come up with a decent plan. A business plan that provides a solution to a problem without looking into the factors related to that issue will not contribute anything to the company. Rather, it will have to cover a lot of things that one wouldn’t have thought.

Despite these hassle of writing these plans, the result of the endeavor will provide the company with something that could contribute to the success of the business. For one, it would teach the business owner things that he or she is not familiar. During the process of writing, he might even come across problems that he would be able to solve even before they affect the business.

Aside from helping in securing business funding, having a business plan could help the company achieve goals such as finding new ventures, securing suppliers, and engaging more customers.




More detailed information and useful advice can be found at Created by Mark Favre, it offers expertise and assistance with developing and funding your concept, including a private forum for queries and discussions. If you need access to investors and funding providers, please do check our

Honest Things All Business Startups Owners Should Do

When talking to potential sources of business funding, startup owners tend to present exaggerated information as regards the status of their companies. No one can blame them. After all, investors prefer companies that show potential in getting big in the industry that they are working on.

Don’t get it wrong. Exaggeration is not a bad thing, especially if it can be classified under the “optimism” category. There’s nothing wrong with saying that you see your company as the next big thing if you have the numbers to back it up. The problem, however, is that people tend to exaggerate to a point that they present fabricated data and unachievable goals.

In these cases, instead of securing investments, entrepreneurs will find themselves with a series of negative responses from their potential business partners. For those who do not want to experience this, here are some honest things that all startup owners should do:

Create a realistic financial projection

Investors want to see financial projections that promise a huge increase in the company’s market value in just a few years. As the owner, you have the right to believe that the worth of your business Continue reading “Honest Things All Business Startups Owners Should Do”

The Future of Your Business: To Sell or Not to Sell?

Selling a company – either in part or as a whole – is a common practice among entrepreneurs. And while this is generally acceptable, some owners tend to hold on to their companies due to a number of reasons. These include attachment or sentimentality, lack of time to plan an exit, and the lack of knowledge about the process of selling a business.

If you are one those entrepreneurs who are thinking twice because of at least one reason stated above, read on some things that urged other CEOs to cash out their revenues:

The Seven D’s

According to Guy Beaudry of STS Capital, a business owner tends to think about selling his or her business whenever he or she encounters one or more of the infamous “D’s” in entrepreneurship. These are:

  • Disenchantment;
  • Disability;
  • Disagreement;
  • Disintermediation;
  • Debt;
  • Death;
  • Divorce; and
  • Disease

If you have at least one of these D’s and you feel that you cannot manage it without letting go of your company, then it is better for you to schedule a meeting with your most trusted advisors and explore the possible things that you can do.

Private Equity Investments

In recent months, it became apparent that there is an increase in the amount of available capital in the market. Most of these are from private equity groups that invest in promising companies to gain significant, if not complete, control of the businesses. Once in control, these groups will use its resources to improve the revenues of the companies and sell it at a higher price after a few years.

Many entrepreneurs are enticed to strike a deal with private equity groups because of the promise of huge profits. Before signing an agreement, however, remember that improperly handled private equity investments could also lead to disastrous results.

International Investments

Aside from investments from local private equity groups, there is also an increase in the number of Asians – mostly Japanese and Chinese – who want to invest in companies in the United States. Various articles show that the available amount of money from international investments ranges from about USD75 to 100 million. So if you are planning to cash out your revenues, then you might want to consider the huge amounts of capital that could come from Asian investments.

Current Market Status

Finally, a number of CEOs said that they have decided to sell their companies after a thorough observation of the status of the current market. There are three situations that usually signal owners that it is time to divest their revenues. These are: 1) the market of the business is getting a lot of attention; 2) the company is expanding and posting modest revenues; and 3) the company is having a hard time expanding.

If you think that your business is experiencing one of these situations, then – like in the first reason – it might be advisable to talk to your most trusted advisors.

The Next Question

Once you have decided to cash out your revenues, the next thing that you have to ask yourself is whether or not you want to leave your company. Some owners do not mind staying as an employee in the company that they have started. Others, however, find this kind of set-up unacceptable.

In the end, it’s your choice. Do you want to stay for a year or so in the company, or do you want to immediately retire or move on to your next venture? It’s up to you.

More detailed information and useful advice can be found at Created by Mark Favre, it offers expertise and assistance with developing and funding your concept, including a private forum for queries and discussions. If you need access to investors and funding providers, please do check our website.

Things You Need To Know About The Lending Market

Obtaining a loan for a startup is not a simple process. Aside from selecting among the different types of loans that are available in the market, entrepreneurs should also consider the criteria that will be evaluated by the lenders.

If you are an entrepreneur who have recently decided to apply for a loan, it is important for you to first have an idea of what you are going to do.  Keep in mind what want, and ask other people for their opinions about your plans. Hearing similar statements from different people will give you the general picture of your prospects. Once you have done that, it is time for you to make a decision – will you, or will you not, proceed with your loan application?

Most of the time, small business owners – especially those who do not love the terms of the loans that they are being offered with – encounter difficulties in making a decision. In these instances, entrepreneurs should consider asking themselves questions such as “Will this loan result in the further expansion of my business?” and “Will this loan prevent me from worrying about the finances of my company every night?” If you answer affirmative to these questions, then perhaps it’s time for you to take that offer.

As stated, some entrepreneurs decline loan propositions because they do not like the terms that they are being offered with. Unfortunately, the reality is that once a certain type of loan has been approved, it is very unlikely that you can force the lender to offer you with a more favorable type. Usually, despite the presence of thousands of propositions out there, banks rarely change their initial computations. The pricing and conditions that were primarily offered to you are subject to your startup’s economic status and credit rating. These usually don’t change in a matter of days.

On the positive side, while it is true that lenders do not change their initial offers, it is possible for you to apply for a new loan in six months or one year. Because the criteria that are being evaluated by the lenders evolve and change, entrepreneurs should keep in mind that they will never be stuck in the same loan type forever. So why not take that loan now apply for a better one in the future?

Unfortunately, the changes are not always for the better. Sometimes, a bank may decide to call the credit line of a company that is facing major problems. And while it is possible for the business to slowly pay their credit, the better way to handle the problem is to pay off the line in bulk and move to a factor that will lend the company all the capital that it needs. Factors are more expensive, but it is one of the best solutions to the problem at hand.

The bottom line: when you decide to apply for a loan, knowing your business is not enough. You should also understand how the actual lending market works.

More detailed information and useful advice can be found at Created by Mark Favre, it offers expertise and assistance with developing and funding your concept, including a private forum for queries and discussions. If you need access to investors and funding providers, please do check our website.

The Secrets Of Bank Loans: Why Is It So Difficult To Get The Cheaper Ones?

The problem with bank loans is this: the cheaper it gets, the harder it is to obtain one. It is a common belief that a cheaper item is easier to acquire than those that are more expensive. This is true, but only in cases where you are expected to spend your money. Bank loans are the opposite. Because the banks are the ones that will give you some financial support, those that are cheap – that is, with low interest rates – are often the most difficult to obtain. Here are some of the reasons.

According to a senior banker who deals mainly with businesses, there had been an increase in the number of bad loans that affected the banking industry in the past years. With the recent economic crisis, companies are starting to face severe financial problems. This led to the decision of most banks to tighten its measures with regard to the granting of bank loans – lenders are afraid of the possibility that many of the loans that they would grant will not payoff.

This is consistent with what the other bankers are saying. In one survey of the Federal Reserve, only a small percentage of senior loan officers said that they easing their credit standards (9.5% for large and medium companies; 4.9% for small companies). Many admitted that they have started to tighten their standards following the recent recession.

Because of this, bankers report very low number of applications from high quality borrowers. It appears that the banks are fighting amongst themselves over the few good companies that need financial support. And instead of easing their standards to allocate other borrowers, the banks preferred to implement desperate schemes to lure these high quality borrowers. For instance, banks are willing to lower their interest rates and give away cheap loans than enter a very risky deal with a company that has a low credit rating.

Recent data showed the decrease in the interest rate spreads of many financial institutions. Spread refers to the difference between what the bank charges borrowers and the amount the bank needs to get the funds for the loan. The latest figures showed that 60% of large and medium business and 46% of small businesses report decreasing interest loan spreads.

This situation must be used by borrowers with good credit rating to their advantage. They should realize that banks have excess funds and that they – the borrowers – have the power to pit one lender against the other. It is high time for high quality borrowers to seal good deals with these financial institutions. Unfortunately, however, this statement is not true in the case of businesses that have bad credit ratings. But at least they now know what they have to do – obtain that high quality category to acquire loans that have very low interest rates.

In case of the lenders, banks have very few options. For instance, offering loans with lower interest rates are indeed better than having a risky deal with low quality borrowers. In the long run, however, banks must face the reality that they have to somehow increase their market. Financial institutions must explore various possibilities such as opening their doors to a specific niche while avoiding deals with companies outside their expertise.

The situation is not expected to get better soon. And the best way to deal with it is to adapt and use the available resources to achieve stability and success in light of the effects of the most recent recession.

More detailed information and useful advice can be found at Created by Mark Favre, it offers expertise and assistance with developing and funding your concept, including a private forum for queries and discussions. If you need access to investors and funding providers, please do check our website.

Funding Your Own Business

Say you are planning to have a business and, furthermore, you know the know-how to bring it into development.  The only thing you are losing is the cold money to get started.  What are your options?

Suppose you do not have a ready line of credit, an extensive bank administrator, rich family members or a significant store of retirement savings you are willing to risk, you are going to have to do some serious preparation and hard work.  Luckily, there are a number of sources of finance for the Business startup owner, at least one of which may be right for you.


Available only to U.S.-based businesses (but if you are outside the US you can look for something that has a similar program), the SBA (the U.S. Small Business Administration) has served a large number of business owners begin their own Business.  The SBA does not issue resources (money you do not have to pay back) or create financial loans straight, rather, it assures financial loans made by personal loan organizations thereby decreasing or removing the danger natural in new organizations and making loan organizations more willing to offer.

The main concern for the SBA is reimbursement ability from the income of the company as well as “good personality, control ability, security and owner’s equity”.  You will be expected to individually assure your mortgage.  This implies your personal belongings are at risk.

As for the types of organizations qualified for SBA financial loans, the SBA enforces the following criteria: the company must be “for-profit” (it only indicates that your company has a revenue reason, not that it has actually produced a revenue yet), ), be engaged in business in the United States, there must be “reasonable” owner equity (what’s reasonable will depend on the circumstances) and you are expected to use alternative financial resources first, including your own personal belongings.

The SBA also enforces restrictions on the use of loan proceeds. For example, although the proceeds can be used for most company requirements (the cases given by the SBA include “the purchase of real estate to house the company operations; development, remodelling or leasehold improvements; getting furniture, furnishings, equipment; buy of inventory; and operating capital”), you cannot use the loan proceeds for financing floor-plan needs, to pay current financial debt, to create expenses to the business owners or to pay past due taxes etc.

As a common concept, loans for working capital must be repaid within seven years and loans for fixed assets must be paid for by the end of the economic life of the assets (but not to exceed 25years).


Angel Investors are good spirits with a healthy sense of self-interest. Determining they can get a higher come back if they are ready to take a bit of a risk, they are also often effective business owners themselves and want to give other a hand up. Think of financing from angel investors as a link or gap-filler between being a start-up and preparing for venture capital.  The kinds of money we’re referring to here are between about$150,000 and $1.5million.  Beyond this point you are in low venture-capital area. The SBA reports that there are around 250,000 angels in the U.S., financing about 30,000 organizations a year.  So, how do you connect with one?  Not a easy task, unfortunately.  It comes down to networking.  Begin by speaking with professional and business associates – they will often know someone who knows someone etc..  However, we at can help you in this.


You’re in the big teams now.  Usually you are in the ballpark of millions (of money that is) rather than a thousand.  Venture Capital organizations look for their return on investment from capital appreciation rather than interest (unlike banks, for example).  They’re generally looking for a return of 500-1,000% on exit. It will not shock you to learn that vc’s are particularly hesitant of internet-based organizations right about now and not surprising.  It also provides them right.  But if you have a powerful Business Plan and powerful development potential, this could be an option for you longer term.

One of the common issues about this form of financing, however, is that you have a limited control over your business. Venture Capital usually wants to have control on your business, in return for their risk. A venture capitalist will have to seat as a board member, for example. Always remember, that it’s in the vc’s best passions for your company to be successful, so providing up some control in return for outside skills may well be something worth thinking about.

For this, your best bet would be to begin out by analyzing the various loan program provided via the SBA (or your local equivalent).  But do not ignore, close to home sources first.  If you have household resources at your convenience (for example) and you are assured that your business will be effective (and unless you’re assured about that, don’t get into financial debt with *anyone*, let alone household members), better to begin out slowly and convenience into outside sources of financing as your company (and, furthermore, your company’s cashflow) can support it.  After all, Uncle Jack is much more likely to know about the temporary income meltdown than Uncle Sam.

More detailed information and useful advice can be found at Created by Mark Favre, it offers expertise and assistance with developing and funding your concept, including a private forum for queries and discussions. If you need access to investors and funding providers, please do check our website.