Finding Business Funding is a Blistering Hot Topic

If you want to talk about hot topics then talk about business funding. That’s a topic that keeps bubbling up and over the rim of the money pot because credit seems to be so tight. The NFIB (National Federation of Independent Business) reports that    SBA 7(a) loans, which are government backed, have declined significantly in the last few years. As a matter of fact, the number of businesses able to get credit dropped to 41% last year. Sixteen percent (16%) of businesses didn’t get any credit.

 

The question is how did so many businesses continue to startup and/or expand operations in 2010? The answer of course is that they did get credit but not from the standard financing market that includes large banks and commercial lenders. The business funding came from other sources like equity partners or angel investors. The good news is that there is a large untapped pool of money still waiting for the right business idea, but you have to know how to find it and ask for it.

 

Getting More Efficient

 

One of the features any financial market needs in order to operate efficiently is that lenders and borrowers must be able to match up. Yet even in our large economy there are inefficiencies that prevent the optimal number of match-ups from occurring. That’s exactly why there is a private funding financial market that fills the void left by inefficiencies. Making it even more efficient is the fact the borrowers can access central locations and get professional help finding a variety of lenders instead of applying for funding one by one.

                     

Did you know that 64% of new jobs during the last 15 years were created by small businesses and not large corporations? That is remarkable and has to make you ask why banks would limit credit to the very companies and entrepreneurs that can make the economy grow. It reminds you of the old saying about cutting your own nose off to spite your face. Yet there are trillions of idle dollars held by banks and corporations that are only serving to plug holes in balance sheets.

 

These financial conditions create the perfect environment for private lenders. These lenders can provide capital to businesses quickly and efficiently. There is money available for venture capital, business loans and even startup funding which is generally considered a riskier investment. Both lenders and businesses are able to efficiently achieve their goals.

 

The private lending market offers more financing options too so it’s possible to custom tailor the funding based on need. Since the traditional commercial funders have decided to not offer credit, the free enterprise system had to find other options.  That’s why you can now find a thriving financial market that includes money for startup funding, business expansion, inventories, working capital and venture capital.  There are also angel investors willing to make business loans and equity partners willing to accept part ownership in exchange for funding.

Are You Telling Yourself ‘Doing’?

A question frequently asked goes like this: if alternative funding is available then why aren’t businesses accessing it? The answer is that too many borrowers believe they are not eligible for alternative funding options or lack information about the availability of private lending markets.

  • Don’t know what type of investors are available
  • Don’t know how to go about developing a business plan
  • Don’t know how much money is available and underestimates opportunities
  • Don’t want to be discouraged again by a negative response to credit requests
  • Don’t want to pay excessive loan origination fees and exorbitant interest rates

Too many businesses and entrepreneurs get discouraged after trying to find funding and getting turned down several times. The thought of applying for venture capital or searching for equity partners is overwhelming. It’s great to tell people they have to be determined but at some point the answer must be “yes.”

Using a central marketplace for bringing lenders and borrowers together makes perfect sense. This is an ideal market that is cost effective and efficient. You don’t waste money travelling from bank to bank to bank only to get turned away. The lender can find eligible borrowers with ease. It’s a good setup for everyone involved and is good for the economy too.

http://www.funded.com.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 to access a vast network of business people, entrepreneurs, partners and service providers to help you start, finance and run your business, check it out

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