| Business owners at either start up or sometime in | | | | specialties include leasing and asset based lending, as |
| the business existence need financing. Many a joke | | | | well as non bank working capital arrangements, |
| has been offered regarding financing offers when | | | | commonly called ' ABL''s. Various government loans |
| you don't need it, however if you need financing to | | | | and grants are available to business borrowers. They |
| survive that becomes a different story. Business | | | | have very good rates and good structures - the main |
| owners must be able to assess whether they are | | | | complaint of borrowers is time to consummate a |
| candidates for traditional or non- traditional financing. | | | | transaction. Non- Traditional Lenders: This group can |
| Traditional lenders want to grow your business; they | | | | be categorized in 4 categories. |
| are not looking to fix your problems. When business | | | | Employees |
| owners have to attract additional equity the problem | | | | Friends/Family |
| usually is that they have to give up a healthy piece | | | | Private third party lenders |
| of the ownership of the firm. So who are these | | | | Suppliers |
| 'Traditional 'lenders? It is essentially a short list: | | | | Most business owners do not realize key employees |
| Banks and Trust Co's | | | | are often an untapped source of capital. They have a |
| Independent Finance companies | | | | vested interest in their employment and careers, and |
| Venture Capitalists /Private Equity Firms | | | | often want to be considered for ownership and in |
| Government | | | | succession scenarios. Management buyouts are a |
| Let's discuss some of the basics of those traditional | | | | very common and quite successful strategy. Friend |
| players. Banks are the most obvious of all traditional | | | | and Family is of course a sensitive area - we all know |
| lenders - they focus on assets and collateral and | | | | comments made around mixing friends, family and |
| personal guarantees of the principals. If a firm cannot | | | | money. Care is required in this area. |
| meet their lending criteria it's three strikes and you | | | | Most business owners never consider suppliers as a |
| are out scenario. Venture Capital firms look for | | | | form of potential capital. This group has a vested |
| healthy portions of a firm's equity. They want big | | | | interest in making your firm successful - your firm is |
| gains over a longer period of time. Generally venture | | | | a customer, and they quite often can see the |
| capital deals are very significant in dollar size. These | | | | advantage of some sort of strategic alliance. Even a |
| funders are very professional and have deep | | | | simple restructuring of your payments to a key |
| pockets, backed often by large institutions. | | | | supplier can bring valuable capital to your firm. In |
| We feel strongly that the biggest mistake firms | | | | summary, there are various sources of traditional and |
| make when contemplating venture capital is either | | | | non-traditional funds available to business owner. |
| the small size of their transaction, or that funds are | | | | They certainly are not unlimited in choice, and every |
| being solicited for the wrong reasons. Independent | | | | business has a unique need and situation that requires |
| Finance firms are largely collateral based. Rates are | | | | a special focus and assessment. |
| typically a bit higher than bank type rates, and | | | | |