| Alternative capital generally refers to capital achieved | | | | are and to weigh the advantages and disadvantages |
| through unconventional means and is usually used by | | | | of the various options available. |
| small business owners. In the modern business world, | | | | Alternative capital online generally refers to the |
| there are many sources for alternative capital, but | | | | process by which a business owner uses Internet |
| the competition is fierce. The key to securing | | | | research to obtain non-traditional funding for a |
| alternative sources of capital is to motivate and | | | | business. Individuals usually turn to alternative means |
| interest prospective investors by presenting a stable | | | | of funding when they have been denied financial |
| business plan that focuses on the potential growth of | | | | assistance from traditional lenders, such as banks. |
| the business. | | | | A small business investment company (SBIC) is one |
| The most common type of alternative capital is a | | | | type of alternative capital online. These organizations |
| private investor such as a wealthy family member or | | | | are part of the Small Business Administration, and |
| businessperson and others with the means and | | | | they help high-risk individuals get the money they |
| willingness to invest in start-up companies. Private | | | | need to start or maintain a business. To be eligible for |
| investors usually seek a portion of the business | | | | funding from an SBIC, a business must have at least |
| profits in exchange for their financial assistance. | | | | five hundred employees, have a net worth that does |
| However, many start-up business owners do not | | | | not exceed eighteen million dollars, and have a net |
| know where to find information on private investors | | | | income of no more than six million dollars. An SBIC |
| or how to go about securing a deal for alternative | | | | may not supply as much capital as other resources, |
| capital. One resource on how to locate a private | | | | but their top priority is to help small businesses excel. |
| investor is International Capital Resources. This | | | | Another source of alternative capital is subordinate |
| agency specializes in assisting small business owners in | | | | debt. Also known as a subordinate loan, these debts |
| finding alternative sources for capital. | | | | have a lower priority on the assets of an individual, |
| Other types of alternative capital include Collateralized | | | | which means the individual can receive funds without |
| Debt Obligations (CDOs), subordinated debt, secured | | | | a first lien against his or her assets. Agencies that |
| debt, and joint ventures. These investments can help | | | | provide subordinate loans typically rely on the |
| minimize the risk of capital loss while increasing | | | | projected cash flow of borrowing businesses. |
| available funding. While these alternatives may | | | | Repayment plans for subordinate debt last five years |
| increase financing costs, they also have the ability to | | | | or more, and the borrower usually only makes |
| enhance a business's balance sheet and maintain net | | | | interest payments for the first couple of years. The |
| interest by opening up a substitute to common | | | | majority of these loans are used in conjunction with |
| equity. | | | | secured loans as a means to generate maximum |
| The key to choosing the best alternative capital | | | | cash flow for a business. |
| source is to decide what the needs of the business | | | | |