Everything you will ever want to know about raising capital to start your own business or expand an existing business. This site provides guides that cover the following financing topics.
Royalty financing is an advance against future product or service sales. The advance is paid back by diverting a percentage of the product or service sales to the investor who issued the advance. Most appropriate for established companies that have a product or service or emerging companies about to launch a product with high gross and net margins. Learn more.
Working with angel investors means acquiring venture capital from individual investors. These individuals look for companies that exhibit high-growth prospects, have a synergy with their own business or compete in an industry in which they have succeeded. Most appropriate for early-stage companies with no revenues or established companies with sales and earnings. Learn more.
If an employee leaves his employer to start a new business, his or her 401(k) can be used to invest in, or even to finance, the new venture. Appropriate for any company at any stage of development. Learn more.
Institutional Venture Capital
This type of funding includes venture capital from professionally managed funds that have between $25 million and $1 billion to invest in emerging growth companies. Most appropriate for high-growth companies that are capable of reaching at least $25 million in sales in five years. Learn more.
Sometimes to raise money to start a business, entrepreneurs will sell assets, borrow against their home, borrow against insurance policies, secure financing from family members, etc. Learn more.
Equipment leasing is basically a loan in which the lender buys and owns equipment and then “rents” it to a business at a flat monthly rate for a specified number of months. At the end of the lease, the business may purchase the equipment for its fair market value (or a fixed or predetermined amount), continue leasing, lease new equipment or return it. Appropriate for any business at any stage of development. Learn more.
The Microloan Program was developed by the SBA in 1992 to increase the availability of very small loans to small-business borrowers. It achieved permanent status in 1997. The program uses nonprofit intermediaries to make loans to new and existing borrowers, and since 1992 has accounted for more than 12,500 loans totaling more than $112 million. These funds may be used for working capital, inventory, supplies, furniture, fixtures, machinery and equipment. Learn more.
Term loans are the basic vanilla commercial loan. They typically carry fixed interest rates, and monthly or quarterly repayment schedules and include a set maturity date. Bankers tend to classify term loans into intermediate-term loans or long-term loans. Most appropriate for established small businesses that can leverage sound financial statements and substantial down payments to minimize monthly payments and total loan costs. Learn more.
Private Loan Guarantees
A guarantee of payment that stands behind an early-stage company and enables it to take out a loan from a bank. Conceptually, private guarantees play the same role as an SBA loan guarantee. Most appropriate for early stage companies that within a year will turn the corner toward profitability, or commence product sales. Learn more.
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