I think that this is the wrong question. They forgot the rarest and most important thing: the ability to implement a project or idea.
I have found that both ideas and capitol are pretty easy to come by. The thing that usually gets in the way is the ability to implement the project/idea.
Smart investors only invest when they think that there is a good idea and the business can successfully implement the idea. The ability to communicate that you can implement the project is the main key to getting funding.
When a funding source looks at a proposal, they generally spend 10% of their time looking at the idea and 90% of their time looking to see if the requester has the ability to implement the idea. Unfortunately, most proposals focus on the idea. I think that this is why people think that capitol is hard to find. They are hunting tigers but they are using cabbage for the bait.
10 things we need in an Executive Summary (for $10M - $100M) or a Business Plan ($100M+):
1. Presentation of the Borrower.
Company name, full address, phone, fax, E-Mail address, Major Industry Category, business goals and objectives; Authorized capital/paid up capital and self-financing so far; principal shareholders names with percentage of shareholding.
2. Project Description.
Name of project; exact location and address; description of project; summarize history of the project and current status; what is the property or land worth today?
3. Current Situation.
If an acquisition, is there a purchase agreement? If permits are required, have they been obtained? Are there any commitments from buyers? How much cash have the borrower(s) put into the project to date? Does the company have access to any more resources?
4. Use of Funds.
How much money is needed? Include summary of major use of funds. When are funds needed?
5. Financial Projections.
Include abbreviated summary projections of profitability for three to five years. Include projected cash flow.
6. Management and Employment.
Management structure; what is management’s background? Current and projected levels of employment.
7. Market Analysis.
Who/where are your customers? What are your terms of sale (cash/credit terms)? Who are your competitors? What is your competitive setting advantage?
8. Marketing and Sales Fulfillment issues.
Describe your customers and how you plan on reaching them; what has to happen before you can begin selling? Are you planning on preleasing before building begins? Will there be an anchor?
9. Business Risks.
What are the possible risks associated with this venture? What steps have/will you take to reduce these risks?
10. Exit strategy.
List steps that will be taken to repay the debt on the loan and the timeframe expected, etc.
These aren't exactly business lines of credit but I recently came a cross a source for Venture Capital (VC) that will lend $100M or more. They want 30% of the equity. That's much better than many other venture capital sources. They can fund as quickly as three business days if you give them all the info they need up front.
As I stated, they only want 30% of the equity. So they aren't going to make a grab for control of your business. The fact is, they don't want to run your business. If they aren't confident in your teams ability to adequately run your business, they wont invest in it.
So, what you need:
1. A good product or service
2. A good market for that product or service
3. A good business plan
4. A good exit strategy
5. A good team
If you have all five of these, they will consider your application.
As I mentioned in This Post, lending has tightened up in business lines of credit.
Here are some issues that have resulted in ZERO MONEY in the last 3 months:
- Over 12 inquiries (4 per bureau) in the last year
- Under a 675 FICO score
- Over 70% debt ratio on revolving credit
- High balances on Net-30 or $0 Limit accounts, such as Open AMEX cards.
- HELOC or Mortages under 4 months old
If any clients have these stats – THEY ARE CERTAINLY A NO-GO
I just got word that the lenders that provide the larger lines of credit have frozen their accounts and will not be providing their lines of credit in the near future.
What this means is that you can still get up to $250,000 in business lines of credit (through individual $5,000 to $30,000 lines).
It looks like the residential lending crunch has finally started to hit business credit.
More later when I know the why's and wherefores.
Do your clients run small businesses?
Will an extra $30,000 to $1,000,000 help them in their business endeavors? [EDIT: the current max is $250,000, see This Post]
Contact me so we can find out if this program will benefit your clients.
New Affiliate Program for Helping People set up Business Lines of Credit
One of the companies that helps people set up business lines of credit is creating an affiliate program for me.
We are still putting it together but we've implemented enough to serve your needs.
The company issues an affiliate number and they send out your commission after a service contract is signed. Actual timing for that is that they send out checks on the 5th and the 20th and it takes 8 days to process a payment and do their due diligence. Completed contracts on the 12th get paid out on the 20th (the 5th depends on the end of the last month).
After you send in the signed affiliate agreement, I will set up a separate sign up page so you don't have to rely on the client to enter you as the referrer.
Each client's situation is unique. They will be be giving me their personal information. I will let you know that a conversation took place but I will not tell you what was said beyond whether we will be moving forward. You may follow up with your client at your discretion.
If you are interested in an affiliate program for business lines of credit, Contact Me and we'll see if these programs would benefit your client base.
The main difference between business credit (also known as corporate credit) and personal credit is that personal credit is all based on the FICO of the owner of the business. Business credit is based on both the PAYDEX score of the business and the FICO of the CFO of the business.
PAYDEX is like the FICO of a business it ranges from 1 to 100. The optimum range is near 80.
Personal Credit affects you FICO score. Business Credit affects the business's PAYDEX score and has no effect on your FICO.
One of the common misconceptions is that you don't need to personally sign for a business line of credit. Maybe 5-10 years ago when lenders were tossing money out the windows for businesses that might have been true. Not any more. The main difference is that the signer will be the CFO not the business owner. Also, while the CFO has to sign for the line of credit to open it, if the company performs well then in about 18 months the CFO can generally be taken off the line of credit and the LoC will then be completely on the company.
The interest rates can be very different. Most personal lines of credit have rates of prime plus 2% - 4%. A properly set up and managed corporation or LLC can get rates under 6% even in today's market.
Here is one reason:
Most corporate credit costs Prime plus 2 - 4%. In today's market that is between 8% and 12%.
However, if a corporation is set up correctly, you can get rates under 6%. That can be a huge savings if business credit is going to be an active part of your business strategy.
The page Programs Available now appears in your navigation.
This is where I add programs as I find them and approve them. So far, I have 4. I'll let you know here when I add more programs.
They are in the business of collecting setup fees rather than helping you establish corporate credit.
One of my friends found one of these. They collected $5000 for each of two people that my friend was working with to establish corporate credit and it's been over a month with nothing happening except occasional "we're working on it" messages. That's $10,000 down the drain.
One thing that he did not do is check references of people who have established business credit through that company.
I won't publish their name here since I don't want to get sued but if anyone asks about a specific company, I'll let you know if I've heard of them and if I recommend them. If I've heard of them but don't recommend them, you have your answer (unless I give a specific reason why I don't).
Unfortunately, it is very hard to tell the good companies from the scams since the scams try very hard to sound like the good companies. So, always check references.