Business Plan Funding

-

Getting funding for your business is provided by investors, and is typically based on a company's business plans' ability to show how much money is needed, how much money is going to be made, and how the investor will benefit.

A well-crafted business plan offers a glimpse into the past, present, and future of the company. Generally the funding is awarded based on financial projections that usually include a 2-3 year cash flow forecast, 3-5 year financial information forecast, and a detailed and specific plan on the how the loan will be repaid.

There are two basic types of business plan funding: debt and equity.

Debt funding is where a company borrows money (as with loans) and must pay it back with interest in a timely manner. There are many sources for debt financing: traditional bank loans, savings and loans, commercial finance companies, and the U.S. Small Business Administration (SBA) are the most common. Usually, these sources are best for companies that have a high ratio of equity-to-debt.

Equity funding means taking on private or commercial investors, and making your business accountable to your investor. Many small business owners raise funding from relatives, friends, colleagues, or customers who hope to see the businesses succeed for a return on their investment. However, the most common source of professional equity funding comes from angel investors or venture capitalists.

Venture Capitalists are institutional risk-takers and may be groups of wealthy individuals that are willing to offer promising new businesses the capital needed. These investors include individuals with substantial net worth, corporations, and corporate financial institutions. If a company has a high proportion of debt to equity, most experts advise increasing the ownership capital (equity investment) for acquiring money to finance your business plan or obtain a commercial line of credit.

As always, it is best to consult with experts and trusted advisors before making a decision that will affect your business.

Postingan populer dari blog ini

Buying a Business - Understanding Small Business Financing

-
As a business broker I am frequently discussing with clients and prospective buyers methods of small business financing. Once a buyer and seller agree on price and terms, it all boils down to due diligence and financing. A lot of factors can determine how lenders will view your deal. It will depend on the type of lender, type of business, and what kind of assets does the business own that can be used as collateral. Is there real estate involved in the transaction? A commercial banker or loan broker will show you what factors matter most and get your deal funded with their products. Cash and Equity Of course, if you're paying all cash, none of this is your concern, however 100% cash deals are not the norm. Every business is unique and different, but one thing is certain before you seriously consider pursuing a business for sale: You or one of your partners will need sufficient liquid capital or equity for anyone to finance your deal. Bank Financing The stories of a "no ...
Baca selengkapnya

Business Finance - Do You Need Huge Capital to Start Your Business?

-
I was having this conversation with a business coach colleague yesterday. She deals with a lot of business owners, especially those starting out and those experiencing rapid growth. She'd been doing some research and one article she read suggested that a major reason that businesses fail is because of a lack of capital. This got me thinking about how people fund their ventures and whether they need a lot of capital to start their own business. To be honest this really depends. If you are a product based business obviously you will need capital to invest in product but, if you were to start a service based business, you can often times get your business started with little or no investment plus time. You will need some capital though and there are some options available to you: Friends and Family- Many people look to family and friends to fund their business ventures, especially if the funding required is small. Family and friends will generally offer you generous repayment ter...
Baca selengkapnya

Changes For Business Finance and Working Capital Loan Programs

-
As business owners develop their small business loan plans for future financing and refinancing throughout the United States, there is an increasing awareness that there have been significant business finance changes that cannot be ignored. Some of these measures are likely to end up being permanent, and even the temporary commercial mortgage loan and working capital loan changes are expected to be in place for an extended time due to the severity of the current financial climate. A reduction in commercial lenders as well as stricter standards for acquiring commercial loans and commercial mortgages has been the net result from business finance changes. Unfortunately there has also been no shortage of misinformation about the availability of commercial funding. A significant reduction in business lending activity overall is perhaps the most dramatic change. This has been due to several events occurring almost simultaneously. Several major commercial lenders have gone out of busines...
Baca selengkapnya