The most common type of lender is the commercial bank, credit union, savings and loan companies, or investment companies. These lenders offer business loans, however, often times these loans must be secured. This could mean offering up your personal assets as collateral. Although the business is yours to do with what you want, these loans are very risky to any un-established business. And that’s assuming you qualify.
c are also available. Many businesses and government agencies or organizations allocate special funds to lend to minority business owners. The MBDA or Minority Business Development Agency is a federally funded agency that specializes in fostering minority-owned businesses. This agency can help minorities with personalized assistance and financial planning to secure adequate financing for business ventures.
One type of investor that can loan a business money is called an “Angel Investor.” These are professional investors who invest solely in companies. Angel investors are an excellent source of early-stage financing. Often times, angel investors will finance a business loan that may appear a risk to commercial banks or may appear too small to venture capitalists. One downfall to angel investors, they are often highly involved in the business itself. Many business owners do not want someone else running the show, so to speak, and opt to stay away from angel investors for business loans.
Venture Capitalists are in the business of loaning money to businesses that offer strict investment criteria and specialize in very specific high-growth industries. In return for capital, venture capitalists will acquire stock in the company. Venture capitalists generally look for businesses that can show profit within three to five years, and then they move on. However, during those three to five years, venture capitalists play a very active role in shaping the business. This often leads to a lack of control by the business owner.
Both angel investors and venture capitalists can be found by asking your business lawyer or accountant. Or you can conduct your own search via the Internet.
Many individuals turn to family and friends to acquire a business loan. Others may seek financial assistance through business partners or potential customers. No matter whom you ask to lend you the money you need for your business, having a good business plan or blueprint is the key. No investor, large or small, wants to invest in a business that doesn’t have a good foundation, and that always starts with an excellent blueprint.