Financing

For many people and businesses the old way of getting financing is no longer available. Bank lending is more stringent and requires better credit ratings and more guarantees than previously.

Does this mean it’s impossible to get financing for new businesses or new ventures? Not at all, however, it does mean you might need to be more creative.

When buying property rather that being dependent upon banks to provide the capital, see if the selling is willing to do some form of seller financing.

When looking for financing for a business, realize you might have to give up a larger percentage than you might prefer or you might need to give up more control than you might like if you go through a third party (for example, an angel investor or venture capitol). The thing to keep in mind is 100% of 0 is 0. A smaller percentage of something is bigger than one hundred percent of nothing.

Also realize the more risk you are willing to take yourself, the more an investor is willing to consider working with you. Too often the person with the “idea” or the person putting in the “sweat equity” doesn’t feel they should have to take any of the financial risk. Even if they are willing to take on a small amount of the risk, being willing to take on some of the risk is worth a great deal to others. If you have no stake at risk, it’s easy to make a half ass effort or to waste time and money because it’s not your money. If you are going to lose if the venture loses, in many cases your actions will be quite different. One thing to keep in mind with this is the “lost opportunity” doesn’t count as assuming some of the risk. It’s true that you might not make what you hoped if the venture doesn’t work but you might act quite differently if you are risking the ‘opportunity’ as well as your house.

Financing is available for those willing to be creative and those willing to take on some of the risk themselves. The alternative is to go with the bank and if they turn you down, you have your built in excuse right there…even if it’s not a legitimate excuse

Just something to think about.

Have a great day!

Lawrence

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