Business Tips: Find A Financial Backer

Finding a financial backer doesn't have to be as hard and complicated as it seems. In fact, though you've heard it's a big headache trying to get a financial backer, the truth is, there are institutions and individuals who are looking to help small businesses get off the ground.

Business Tips: Finding a Financial Backer

Are you considering starting a small business and have current needs for financing? Are you weighing the differences between the various traditional and non-traditional forms of financing your small business?

Finding a financial backer doesn't have to be as hard and complicated as it seems. In fact, though you've heard it's a big headache trying to get a financial backer, the truth is, there are institutions and individuals who are looking to help small businesses get off the ground.

Let's take a look at some different options for backing your small business.



Private Investors

Small businesses have many concerns, especially when it comes to financing their enterprises. A private investor may be a wonderful option if you haven't established much credit yet in your life. Private investors are likely to work closer with you and give you a chance at establishing credit. A private investor may be the way to go if you have a very specific and unique idea that traditional banks may reject, or if your venture is very risky.

Private investors are more likely to be found among your family, friends or peers. Sometimes private investors are looking for talent and unique products to finance and can be found advertising online or in a business magazine. Some agencies provide listings of private investors and can help small businesses get hooked up with them. Private investors make excellent financial backers for small businesses.

Loans

There's no reason not to consider getting a loan from your bank or some other financial institution. A bank can serve as your small business financial backer. Loans vary, but are often the most common way to obtain financing for a small business. Establishing a good relationship with a banker is important. As your financial backer, bankers are extremely helpful and well trained in the loan process, and can often make suggestions that can save you a lot of time and energy.

Loans vary in amounts, and the length of time allowed for paying them back. The interest rates on loans can range by a few percentages, but each percentage can make a difference. Be sure to check with your banker on the variety of rates available. As your financial backer, your banker will explain the differences between fixed rates and rates that can go up and down, depending on the economy. As your financial backer, your banker should be able to direct you to a loan that fits best for your particular small business needs. From there, they will have you fill out a loan application. As your financial backer, your bank wants to make sure your business is a safe investment. The more details you provide on your loan application, the better your chances of getting a good loan.

Small Business Grants

Another method of obtaining financial backing is through a small business grant. Many government grants can be obtained, but often have strict stipulations. Sometimes grants can only be given to non-profit organizations. If you're not in this category, obtaining a grant may be close to impossible. Still, there are federal agencies that are setup with the specific purpose of helping small businesses get off the ground. These special initiatives can serve as the perfect financial backer for you. They, too, have external research and development requirements that must be met by small businesses. Check with the Small Business Administration about small business grants available in your city or through national and federal channels.

Venture Capital

Venture capital is a wonderful source of financing for small businesses. Venture capitalists are a group of investors, sometimes rich billionaires; other times owners of dozens of successful businesses who are looking for new ventures and opportunities. Venture capital is another great way to back your business financially.

As you search for a financial banker, keep in mind that they will require information from you that shows you're worth investing in. Having a professional business plan is very important, as well as any fliers, articles, and/or informational fact sheets on your business. A press kit is impressive as well. The main thing you want to do is establish credibility, and the fact that you're a responsible business owner. Financial backers want to invest in success, so show them your portfolio of past successes.

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