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Funding from equity financers

Getting an Equity Loan or Funding from equity financiers. Some lenders offer funding for equipment purchases, up to 100%; for equipment leasing also up to 100%; and up to 90% for small business cash flow etc. Interest rates vary per program from 4.75% to 8.75%. Typical loans begin at $25,000 up to $350,000 by one firm advertising on the Internet.

The time to pay back can vary from 12 months to 10 years. These are loans written by the banks etc. in the towns or over the Internet. There are numerous Internet banks available.

There are plans for new and used equipment as well as real estate purchases.

Also you could get a personal loan. Some lenders state they will get money to you in 24 hours and you can apply `on line' or on the Internet. Some state in their advertising, that you do not need to put a 2nd mortgage on your home, and do not need an appraisal to secure the loan.

You could get a personal line of credit or a personal installment loan.

A personal line of credit, also called an open-end loan, gives you the ability to borrow over and over, or write checks as needed. The interest rate is based on amount borrowed and your dependability to pay back in a timely manner. This is a revolving credit account.

A personal installment loan is a one-time lump sum loan. You know what your monthly payments will be, and as long as you pay on time, you will be able to keep the same payment amount for the entire loan. These are called closed end loans.

Many businesses also secure equity loans with major companies on the Internet and off the `net'.

Some advantages of equity loans are:

You do not need to pay any interest on the equity loan; your business will be expected to generate revenue, which will pay dividends to the equity lender. However you will need to provide detailed information to the lender, specifically outlining the performance of the business and future expected profits. The paperwork can be pricey.

Some advantages of this paper trail of daily sales, costs, etc, can also assist the owner in getting additional lending. Your equity partner usually has connections to assist you.
Equity lending also requires you give up a share of your profits from the business and relinquish some of the decision-making control.

Also this form of a loan, demanding a good return on the equity partner's invested dollars, may lead to short-term decisions toward immediate financial gain for them. Never the less, some major lenders say to business owners:

"Approach us with an idea for increases in your business (increased profits) or an executive summary and we will consider lending you funds to make these plans become a reality.

A primary consideration for the business owner is to make sure the lender whose being looking at, as an equity partner is reputable lender.

There are several recommended methods to use.

The most important method is `word of mouth'. A company has a reputation with the clients being served by prior loans. If you can get this first hand knowledge of a company, it's value to you could be the difference between a `bad deal' where the new equity partner forces bad decisions on you; or a good deal where all involved will profit.

Every firm will generate some `press coverage'. Check ABI/inform. See what is written about the lending institution. Also look at Business Dateline and One Source and PROMPT, which report on many of the smaller trade journals and news wires. The coverage is more comprehensive in LEXIS NEXIS. This report also covers the New York Times and many smaller papers. Check your lending firm in the Wall Street Journal Index as well as Dunn and Bradstreet.

D and B includes information on debt financing and bank loans and trade credit. It is much better to find out if your lender may have bad credit, defaulted loans, etc, before handing over equity in your business. This is more of the "due diligence" or self protection you, as owner of your company, want to make a high priority.

When you are trying to get funding from equity financers, you will find that following these techniques will make it easier, and more time effective than simply running around and trying to figure it out for yourself.

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