The Economic Crisis Can Be Your Long Awaited Windfall of Financing for Your Business. Don't miss this great opportunity to get business financing that was out of reach until recently. What happened recently, was a shift in investment focus. The big investment banks and other firms are looking for places to put all the money they are pulling from Wall Street.
Don't miss this great opportunity to get business financing that was out of reach until recently. What happened recently, was a shift in investment focus. The big investment banks and other firms are looking for places to put all the money they are pulling from Wall Street. This can be a golden opportunity for small business. But you must know how to play ball with these big league players.
If you are one of the six million people seeking financing for you business, the following bit of information is a must for you. It will shed light on how to minimize your effort and maximize your effectiveness. If a person doesn't obtain financing, it is generally due to lack of experience. Because, most people have never worked for a company that is in the trenches successfully obtaining funds for a business venture. Further, the educational system just does not teach an entrepreneur how to get business financing. In general, most people think getting financing for a business is as simple as going to a bank until they try, and get snubbed by the banks. In-fact, only about three percent of the startup businesses in America get financing though banks and about another one percent through venture capital firms. That leaves most entrepreneurs out in the cold. That is what this article touches on -- where the other ninety-six percent that do get financing get the money from.
According to a group of studies performed by the SBA and SEC, it is found that only about one in two hundred startup businesses that seek capital actually get funded. If you want to increase your likelihood of being a success story, you must know what really works. Lenders and venture capital firms invest around five billion annually in startups, whereas private investors invest over two hundred billion annually startups. That is why 96% of all startup businesses are funded by private investors. Therefore, if you have a startup it is usually unwise to pursue funding through anything other method than private investors. However, you should be aware that when you seek private capital from investors, there are three very important elements in obtaining funding.
Legal Compliance
Professional Image
Qualified Investors
Moreover, in 1933 Congress enacted the Securities Act. This put in place laws to protect investors. Since that time, people and companies are required to register with the SEC or be exempt from registration. However, later State governments felt the Federal laws were not stringent enough, so, in the 1960's, 70's and 80's most states implemented State security boards. The mindset behind most state securities boards was to create stricter guidelines than those imposed by the federal government. And States ARE STRICT. The States began creating various forms of legislation and regulations. This got complex very quickly, simply because of so many varying and opposing State guidelines. Further, many states had laws that conflicted--making it virtually impossible to raise capital or speak to investors in more than one state. A person could be in compliance with one state and yet in violation of the law of another state. So, Congress retook control of the SEC by creating the Securities Market Improvement Act of 1996, which preempts state law and gives a more standardized approach to getting capital. This new law basically says if you are a private company wanting to raise capital from private investors; you need only qualify for, and file appropriately for exemption under 4(2) of the securities act.
Finally, one can raise an unlimited amount of financing through private investors under the 4(2) plan. It is important to understand the role of image though. Furthermore, it is relatively easy to find prospective investors. One can simply type the term "accredited investors" on a search engine and find abundant resources of highly qualified investors.
However, these sophisticated investors are accustomed to a certain level of professionalism when it comes to a business proposal.
Without a professional business proposal highly sophisticated investors rarely take you seriously . Therefore, you must have a well refined business package prepared by a licensed investment attorney also known as a securities attorney. Once you have your investors to call and you business proposal prepared, you are well on your way to obtaining the financing you seek.
