November 26th, 2002, 11:47 PM
Does anyone out there have any great ideas of where to go to find an angel/backer/silent partner/someone to put up the capital in order to run and start a new limo business other than the regular conventional ways of going to a cold bank?
thoughts? suggestions? much appreciated!
November 27th, 2002, 07:28 AM
The traditional methods for financing a startup are 1) fund it yourself 2) borrow from friends & family 3) bank or SBA loan 4) hard-money lenders of last resort. An alternative you may consider is to find owner financing on an existing business that is for sale and making a profit. Even in this case though the owners still want some cash up front which would have to come from options 1-3.
In any case, with friends, family, bank, or hard-money lenders you will almost certainly be asked for a business plan which includes your financial plan, income and expenses, cash flow analysis, etc. If you already have that prepared then you should talk to a bank first. The only reason to skip the bank is if you have terrible personal credit. If you are forced to go the the hard-money lenders be prepared to pay extremely high interest rates. They also often want a percentage of ownership of your company.
In accumulating the businesses I run I have always avoided the hard-money lenders, even if it means passing on an opportunity. Most of the times I have been able to come up with creative solutions and a few time even some 'no money down' solutions. I believe it is better to figure out a creative way to get the funds through seller financing, , using other collateral you may have (house, land, stocks, etc), sweat equity, asset trades, or many other means that are out there. You can pretty much create your own deal if you have the determination, imagination and a positive attitude. There are plenty of books out there to read which can give you ideas on how to implement creative financing. Finding the deals and the sellers who will consider them is the challenge.
If you still feel like the hard-money lenders are the way you want to go then talk to local business brokers or place an 'investor wanted' ad in the paper. Again, be prepared, as any investor is going to want to see your business plan. He needs to understand how you are going to pay his high rates and his principal back. It is risky to consider this option for large dollar amounts or loans over 1 year. Good luck!
November 27th, 2002, 11:02 AM
Good post !! For me it was " any which way you can."