Writing a Business Plan

Investor Business Plan Resources

Start up Financing --

What It Is: Start-up financing is the initial infusion of money that advances an idea or an intention into something tangible.

Appropriate for: Any business

Best Use: Commencing initial operation to the point where outside investors can see and feel the venture, as well as understand that you took some risk getting it to that point.

Cost: Start-up financing will possess two of the following three qualities: good, cheap and fast. It will never possess all three qualities.

Ease of Acquisition: If you have nothing, it's difficult. If you have personal assets, the hard part is putting them at risk. But doing so is the rite of passage to both success and failure.

Equipment Leasing --

An equipment lease is a contract that transfers the right to use equipment to the Lessee (Lease Customer) in return for monthly payments to the Lessor (Leasing Company). Ownership is retained by the Lessor until the Lessee exercises the purchase option.

Micro Loans --

The definition of micro-loans varies. A typical definition is financing for businesses that have five or fewer employees with a maximum loan size of $25,000. Typically micro loans are made at market rate or higher and often include a requirement to participate in some form of technical assistance program.

Assets Based Loans --

Asset based loans offers a viable funding alternative for companies who encounter obstacles in obtaining traditional bank financing. With an asset based loan, funds are secured with the company’s assets, such as accounts receivable, equipment and inventory.

Angel Investor --

Angel Investor are a non-for profit organizations which provides resources to private investors and enterpreneurs.

Reverse merger --

A "reverse merger " is a method by which a private company goes public. In a reverse merger, a private company merges with a public company that usually has neither assets nor liabilities, referred to as a "shell" corporation. The public company is called a "shell" since all that exists is its corporate structure. By merging into such an entity, a private company becomes a public company.

Bank-Term loans --

Bank term loans are the basic vanilla commercial loan. They typically carry fixed interest rates, monthly or quarterly repayment schedules and a set maturity date. Bankers tend to classify term loans into two categories:

• Intermediate-term loans: Usually running less than three years, these loans are generally repaid in monthly installments (sometimes with balloon payments) from a business's cash flow. Repayment is often tied directly to the useful life of the asset being financed, according to the American Bankers Association (ABA).
• Long-term loans: These loans are commonly set for more than three years. Most are between three and 10 years, and some run for as long as 20 years. Long-term loans are collateralized by a business's assets and typically require quarterly or monthly payments derived from profits or cash flow. These loans usually carry wording that limits the amount of additional financial commitments the business may take on (including other debts but also dividends or principals' salaries), and they sometimes require a profit set-aside earmarked to repay the loan, according to the ABA.

Royalty Financing --

Royalty financing is an advance against future product or service sales. The advance is paid back by diverting a percentage of the product or service sales to the investor who issued the advance.

Appropriate for: Established companies that have a product or service, or emerging companies about to launch a product with high gross and net margins. Also companies with elastic pricing (i.e., the ability to raise prices without impacting sales. In addition, royalty financing is most appropriate for companies that experience a quick cause and effect between marketing activity and sales increases.

Best Use: Financing-intensive sales and marketing activities.

Cost and Funds Typically Available: Inexpensive for companies with high-margin products or services. The range of funds typically available is $50,000 to $1 million.

Ease of Acquisition: Relatively easy because the technique appeals to a wide variety of investors. In addition, because royalty financing is essentially a loan, it generally does not provoke state and federal securities laws.

Business Incubators --

Business incubators help emerging growth companies survive and grow during the start-up period when they are most vulnerable.

SBA-Loans --

Small Business Administration (SBA) are independent agencies.

Even if you have been turned down by your local bank, a SBA lender may be able to help you. Many SBA lenders will give special consideration to minority and/or women owned businesses. You will still need to meet the credit criteria. These are loans not grants.

SBA loans can be used to provide financing for the following uses:

 Contact us to learn more about your financing options at:
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