Raising Capital
Raising Debt or Equity Capital is a difficult process. There are many
potential avenues for raising capital including:
One of the primary keys to raising capital is to develop a strong business plan
that clearly showcases your business, its objectives, and the expected financial
results during the first three to five years of operation. By having a strong
business plan, you will be able to effectively present your concept to potential
angel investors, venture capital firms, or banks for SBA Loans, or
Business Loans. We encourage you to read our articles regarding raising capital
and how best to do it.
With the recent downturn in the
economy, it has become more difficult to raise capital through any avenue
including business loans or private investment funds. However, it is certainly
not impossible. Businesses with excellent earnings potential are still being
financed through debt and equity capital vehicles.
When approaching a potential
funding source it is imperative to clearly define why your business is
economically viable and when it will reach profitability. This is especially
important if you are seeking a traditional business loan as lenders will want to
be able to thoroughly calculate your ability to repay the interest and principal
via the positive cash flow of your business. Banks, especially for smaller
businesses and startup companies, will focus heavily on your profit and loss
statement as well as your cash flow analysis. If you are having difficulties
developing these types of financial models then it is strongly suggested that
you hire a private business plan development firm and/or a CPA to assist you in
this process.
Additional companies that can
assist you in the capital raising process include loan brokerage firms as well
as private placement brokers that can assist you in the capital raising process.