Seeking Business Capital in This Market – Time to Get Creative

Clearly this is not a great market to be a small business trying to raise capital. Banks and other lenders are still holding back out of fear that this crisis is not yet over.

In the mean time, your business is still struggling to either remain afloat or find the capital it needs to grow (which is what everyone wants – but no one is willing to take the first step).

While this is a tough market for traditional business loans, there are a few alternatives that are flourishing – actually making up in some places where banks and other major financial institutions are lacking.

There are three factors that need to be followed in today’s economy to secure a loan for your business.

First, if what you are doing is not working, quit doing it and try something different. There is no point in continually hitting your head against a wall.

In order to try something different, you must first start researching and understanding the numerous other options that are open to all small or growing businesses – then pursue the best option. Much better to spend your time and energy looking for ways that will work for you and your business then it is to continuously fight against forces you cannot control.

Second, get creative. If the banks are saying “no” then look for other lenders or capital sources that say “yes”. There still remains a lot of money in this economy from personal wealth to private investment – money that can be tapped for the right deal.

Banks and other financial intermediaries are only paying fractions of percentages for deposits or CD’s. The stock market looks as if it has hit a new plateau – showing little signs of huge returns for investors – professional or private. This means that those with extra capital are seeking new ways to employ those funds for better earnings and if you want to tap those sources, you have to get out there, locate them and creatively convince them to invest or lend to you – which mean showing them and educating them about your particular business and its benefits.

Get out and network in your community. Ask people for a loan or investment. They may have not even considered this option until you mention it to them – offer returns for their funds at levels that they could not get elsewhere – what other option do you have but to create your own lending market or capital resource bases.

Or, look to the new social lending industry that has really cropped up over the last few years. Many of these social networks or peer-to-peer lending sites offer unique ways for those seeking capital to meet and network with others who have capital and are looking for better returns.

Lastly, piece your needs together. More times than not, most new or young business owners think that their best financing scheme is to get an all-inclusive business loan – a single loan to meet all of their financing needs. But, this is just not the case today.

Asking for too much at one time can create many new problems – like putting your loan request over the limit the lender is comfortable with or authorized to make or makes the deal just to complex for a lender in terms of valuing different collateral or matching different needs with different risks and terms – making it all too easy for the lender to walk away in search of easier bounty.

The goal here is to match funding sources with each business capital need. Thus, if your business needs both new equipment and working capital to complete some new orders or service additional customers – then seek out lenders who deal specifically with each of those types of loans.

Find an equipment lender that works with businesses in your stage of development and industry. For working capital specific to completing orders or building the business (not to cover overhead expenses like payroll or marketing) – look first to your current business assets like accounts receivable or purchase orders and lenders who deal with these specific types of funding activity – thus using the assts you already have or are working on to secure the capital specifically for them – letting those specific assets earn more revenue or customers for your business.

Finding capital in this market is not easy, or at least the traditional ways are not easy for new or growing businesses. But, that does not have to stop you. You are an entrepreneur after all and entrepreneurs find was to get things done – even finding capital in a bad lending market.

All it takes is a willingness to stop doing what has already proven not to work and put those efforts into finding ways that do work – it really is that simple and it starts with you.

By Suzana