25 funding sources

©2013 Anderson Business Advisors (www.andersonadvisors.com)

Special Report

25 New Funding Sources for

Small Business Financing Plus 28 Other Options

Looking for business funding? Where are you looking? Did you head to your local bank, fill out a bunch of paperwork, hand over pages and pages of financials, business documents and otherwise turn over everything and anything related to your business? If so, how did it go? In business, some times good intentions and effort are not enough. You have to know people who know how to get things done quickly and with the least amount of effort. The old adage “Work Smarter – Not Harder” is especially true when it comes to business funding. That is where this Special Report comes in handy. You will be introduced to lending products you might not have known existed. If you are interested in any of them, contact our offices and we will see if there are programs that fit your business. Enjoy the report.

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The burning question you may have is can I obtain capital for my small business? The answer is: Yes! But no matter what type of lender you go to, whether a bank, alternative finance lender or a private source of capital, there are numerous criteria that lending institution utilizes in making a positive funding decision. For a new business venture it may include how much start up capital you have to infuse in your new business, do you have a business plan with realistic financial projections, and owners background or managements experience in this industry. For existing businesses it could be business credit already established, length of time in business, business profitability, business cash flow, business assets, industry type, and reason for loan request. To get a positive loan application decision your business must be properly prepared. The information on your loan application and business plan must answer these deciding questions:

• Can this business make these new loan payments and service its current debt comfortably?

• Will additional revenue be generated by the addition of new capital? • Will the loan strengthen the business?

In today’s economic environment, if you want to be approved for capital, you must be prepared. You must know where you are going to obtain the needed capital you are seeking. You must know the underwriting criteria of that particular funding source. You must meet the criteria of that particular finding source. You must show a detailed plan on how the sought after capital will produce additional revenue and how and when the funding source will get paid back. The fact is today, like it has always been, if you do not look like you will qualify for financing, you will be turned down for financing. If you look like you should qualify for financing, you will be approved for financing. This has always been true and it is true today. You must look the way the lender you are in front of wants you to look to get a positive loan application approval. The good news is capital is available today for small business owners that are qualified and prepared! Now let us examine what we need to do to prepare.

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How Do I Prepare for my Funding Request? There is an old saying that “luck goes to the prepared man”. You can debate the merits of this old saying, but you can not deny that there is very little downside in being prepared. In the world of finance, luck has very little to do with anything. Being prepared is a must! When seeking start-up financing, your lender will want you to answer several particular questions. Some of them will be: 1. What type of business do you have? Is it a sole proprietorship, an S-Corp, an LLC? Why did you choose this model? Having the proper business model will enable you to minimize risks and maximize profits. A Sole Proprietor is more open to personal liability than a corporation, but does take less time for proper documentation. 2. What is the purpose of the business? You need to have a business plan with a vision statement that describes the "what and how" of your business. Where do you want to go with your business? What do you want to be? What direction will the company be taking? What do you want for yourself? Clearly describe your current and future dominant driving forces. Be creative, but also keep it understandable, believable, motivational, and most important, achievable. 3. Who is the target consumer? Who are the people that are going to purchase your product or service? This is where the demographics part of your market research comes into play. You might think you have a good idea about how much people need your business and how much they will pay for it, but unless you have some solid numbers to show an investor or lender, it is all speculation on your part.

4. Who is your competition? Find out as much as you can so that when the lender asks you, you have a good idea how you compare to them. What are their objectives? How much market share do they have? What are your plans for taking the market share from them? What competitive advantages does your company have over them? On a recent TV reality show about people looking for investment capital, a woman had an innovative product that had many advantages over those currently in the market. However, the 3 major players in the industry had a 95% market share and spent hundreds of millions each year on marketing. When asked how she would penetrate the market against them, she had no answer. Of course she didn't get the money.

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5. What 3 things differentiate your product or service from the others on the market? This is where you get to show the lender how much better you are than everyone else and why. Do you have proprietary technology? Is your process of delivery exceptional? Remember that your product doesn't have to be better than the rest. Everyone I have ever asked has told me they can make a better hamburger than McDonald's, yet McDonald’s remain a leader because their system of delivery is one of the best in the world. The biggest question the lender should ask is "Do you have the management team in place that you need to achieve your goals?" This is the part where many businesses fail. When a sports team fails to meet expectations, it's usually the coaches who are fired. They are the ones who have the knowledge and skills to take a dream all the way to the finish. Make sure the lender sees that the appropriate level of expertise is handling finance, marketing, and customer service for your business to achieve the vision and goals you have just described to them. There will be many other questions the lender will ask before they agree to give you any money. Answering the above questions will give you a solid base to build from to help your business become a reality and prosper. When seeking financing for your existing business, your lender will want you to see supporting documentation. Some of that will be; Personal Financial Information Personal financial statement Copies of personal tax returns three years Source/amount of owners capital injection Credit report of business owner(s) Resumes of business owner(s) Business Information Business Plan Description/history of business Benefits to be obtain from the loan Article of incorporation Business credit report Cash flow projections Projected profit and loss statement Current year to date profit and loss statement Current year to date balance sheet Copies of business tax returns last three years Copy of existing business facility lease Schedule of all business term debt Aged accounts receivable Aged accounts payable

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Collateral Information Schedule of Fixed Assets to be acquired with loan and their cost Appraisal on real estate and most recent tax appraisal if applicable There can be many more requested documents depending upon the amount of the financing you are seeking as well as the type of financing you are seeking. There could also be a lot less documentation required. It all depends on what type of lender you are going to for the loan request. It is better to be over prepared and get funded then under prepared and out of business. Business Plans I am asked all the time whether a business plan is needed or not. I work with funding sources everyday. I know what they are looking for and I know a well written business plan is essential, especially to start ups. You should really have a business plan available whether or not a lending institution asks for one with their loan application. A business plan shows a lender the owner takes his business seriously. The business owner has given much thought to how and why they will succeed. Not having a business plan shows the opposite! Most lending institutions require a business plan that is professionally prepared showing in-depth market analysis, competition and accurate financial forecasting. Do not leave this task to amateurs. A business plan can be a deciding factor not only in receiving a positive loan decision but to the ultimate success of your business. Your business plan is your roadmap to success. To get a positive loan application decision, your business must be properly prepared. Have a detailed business plan completed. Have the paperwork I set out above gathered in a logical order. Check your own personal credit and print out your reports before seeking financing. Know the underwriting criteria of the particular funding source you will be approaching. Meet the criteria of that particular finding source. Show them your detailed plan on how the sought after capital will produce additional revenue and how and when they will get paid back. Do your due diligence and prepare for your funding request before you apply for financing. Do this and you will be successful.

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Where Do I find Money? – The 25 Funding Sources for Small Business Okay, we know the reality of obtaining financing in today’s economic environment. We are prepared the best we can be with our business and personal documentation in hand. We have our business plan explaining to lenders why we need the money, how it will benefit us and how and when they will be able to get paid back. Now show me the money! Where is it I go to find the financing that I need? Here are a few of the financing options available for your business. Using your own money You may be saying to yourself, “If I had the money I wouldn’t be reading this report”.

Hold on a moment and let me explain.

Not everyone is aware that they may have financing available to them already through alternative financing lenders we will discuss later. You may have some money set aside and you just don’t want to risk it. The fact is this is the cheapest form of financing you will receive. If you are not willing to risk one red cent of your own money on yourself and your business, you will have a very hard time convincing others to do so. Let’s review possible sources you may already have. #1 You can borrow money from your IRA account but only for 60 days, then penalties occur. So this option is not a good one for 99% of entrepreneurs. There are funding options available through the use of an owner’s IRA for a start-up business, but it must be handled by a professional or you risk disqualifying the IRA. #2 You can borrow from your 401K or pension, but federal laws that must be observed. You can only take out a loan of up to half your total principal and the federal government caps the cumulative amount of loans to $50,000 maximum per account holder. The standard repayment period is 5 years, though certain levels of hardship allow for a longer repayment period. #3 You may have credit cards available. Watch the interest rates. If you have money in a savings account, do not drain it. Place the money is a CD at your bank and take a loan out against it as collateral. This way you keep your principle while getting the working capital you need. #4 You may have an old 57 Chevy you rebuilt and love, or an expensive gun collection, or sports memorabilia, or artwork you can sell to raise the needed capital. I can hear the groaning out there from you readers. I know you may not want to sell your valuables.

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That is your choice of course. But as I stated earlier, the cheapest form of financing will come from you. Once you ask others for financing, you are at their mercy as to what rates and terms you can get. After all, it’s their money, so they make the rules. So if you can internally fund yourself, this is a good option. But the fact is most of us do not have the ability to self fund our businesses, so we will explore other options available. Peer-to-Peer lending You may or may not have heard of peer-to-peer lending. But it is one of the fastest growing methods of obtaining business financing. It is geared for micro-lending or business loans of $25,000 or less. Peer-to-Peer lending (also known as person-to-person lending and social lending, abbreviated frequently as P2P lending) is a certain type of financial transaction (primarily lending and borrowing) which occurs directly between individuals or "peers" without the intermediation of a traditional financial institution. Lending money and supplies to friends, family and community members predates formalized financial institutions, but in its modern form, peer-to-peer lending is a by- product of internet technologies, especially Web 2.0. The development of the market niche was further boosted by the global economic crisis started in 2007, and still relevant today, when person-to-person lending platforms promised to provide credit at the time when banks and other traditional financial institutions were having fiscal difficulties. Zopa was the first person-to-person lending company to launch. It is located in the United Kingdom and started in February 2005. The first person-to-person lending firm in the United States was Prosper, which launched one year later, in February 2006. The first company to launch in Canada for business financing was P2P Financial in September 2010.

The following lists are the current major players in Peer-to-Peer lending;

#5-Kiva #6-Lending Club #7-P2P Financial #8-Prosper #9-Virgin Money #10-Zopa Do not confuse Peer-to-Peer lending with a newer type of lending known as Crowd Funding. Crowd funding (sometimes called crowd financing or crowd sourced capital) describes the collective cooperation, attention and trust by people who network and pool their money together, usually via the Internet, to support efforts initiated by other people or organizations.

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#11-Crowd funding occurs for any variety of purposes, from disaster relief to artists seeking support from fans, to political campaigns, to funding a start-up company or expanding a small business. One of the main advantages of person-to-person lending for borrowers has been better rates than traditional bank rates can offer (often below 10%). The advantages for lenders are higher returns than obtainable from a savings account or other investments. Both of these benefits are the result of disintermediation and the lack of the high overhead of traditional financial institutions with many employees and costly locations. The paucity of administrative procedures in person-to-person lending has the additional benefit that loan applications and the transfer of funds takes less time and both borrowers and lenders can access their money faster. Person-to-person lending also attracts borrowers who, because of their past credit status or the lack of thereof, are unqualified for traditional bank loans. At the same time, because past behavior is frequently indicative of future performance and low credit scores correlate with high likelihood of defaulting, many person-to-person intermediaries have begun to decline borrowers whose credit scores are below a certain level, although they are much more lenient than traditional banks! Traditional Financing #12-Traditional financing is financing you obtain from Banks and Credit Unions. You will need to have excellent personal credit, plenty of collateral and be in an industry the lender likes. Banks and credit unions usually offer the best rates and terms for business loans. But the catch is that they only take “A” credit people. They are not risk takers. They loan money based on low risk evaluations of the borrower. They always have and they always will. A much better and easier route to qualify for is a traditional bank loan guaranteed by the Small Business Administration or SBA. #13 Benefits of an SBA Loan Instead of going to your local bank to obtain a traditional bank loan to purchase a new business or refinance your existing business, seeking out a preferred lender with the SBA is a much better choice. The advantages are numerous when compared to traditional bank financing. 1. Longer Terms - Up to 25 years for real estate loans. Conventional loans often have a maximum 15-year amortization schedule, which can make cash flow difficult during slow periods. Startup leasehold loans can be as long as ten years, vs. three to five years at a local bank.

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2. Lower Down Payment - SBA loans typically have down payments that are usually no more than 10% of the entire project cost. This can greatly lower your overall cash out-of- pocket and increase the rate of return on your investment. Conventional loans often have down payments of 30% or more. Conventional loans often do not finance the loan soft costs, where an SBA-guaranteed loan includes the soft costs (appraisal, attorney fees, title, processing, etc.) within the loan project cost. 3. No Early Balloon Payment - (Also no “payable on demand” clause, like most conventional loans have) SBA guaranteed loans are "fully-amortizing", so you will not face the stress and time-consuming chore and possibly costs of refinancing your loan every few years. 4. No Prepayment Penalty - if the term is less than 15 years. If 15 years or more, it’s a 3 year prepay, but only if you prepay more than 25% of the loan in any one year or if you pay off the entire loan early. The prepayment penalty is calculated on the amount that is in excess of 25% of the balance, and is 5% in the 1st year, 3% in the second year, and 1% in the third year. So, you could pay the loan off in as little as 3 years and 1 day with no prepayment penalty. 5. SBA-guaranteed loans are assumable- SBA loans are assumable with a relatively simple application and a small fee. Traditional business loans are not. 6. No Ongoing Debt Service Requirements - Usually there will not be a minimum requirement to keep a ratio of your monthly debt payment to the income stream that your business brings in, normally known as a debt service requirement (most often a mandatory requirement of traditional bank financing). 7. One-time Close for Construction Loans - If your plans call for construction, it’s a one time close. With no second closing, you begin the amortization schedule (repayment) after construction is completed. You only have to sign one set of documents, work with only one lender, and attend only one loan closing. This saves you money on closing costs. 8. Working with a Preferred Lender streamlines the process - Under the SBA’s Preferred Lender Program (PLP), the SBA has authorized the PLP designated lender to make lending decisions on their behalf. Loan proposals do not need to go to the SBA for approval, which means the process moves more quickly and can usually close in the same time it takes a typical conventional commercial loan to close. The PLP status is only established after a lender has had a solid, ongoing relationship with the SBA. 9. Available property types to finance are more numerous under SBA- The property being purchased must be for business use and can either be an Industrial or Commercial Building, a Retail Shop, Office Condominium, or even a single purpose property (such as a Gas Station, Car Wash, Motel, Restaurant, etc.). The business must occupy at least 51% of the property being purchased. If bank financing is not an option then where do you look next?

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Alternative Financing - Where to Go When the Bank Says No! What is Alternative Financing? Simply put, it is financing for those that are not bankable. If you have been turned down by traditional funding sources like banks or savings and loans, it does not mean you cannot obtain financing. You’ll need to look into alternative financing sources. Alternative finance sources, also known as the secondary market and commonly referred to as the cash flow industry, is made up of thousands of private investment groups not regulated by the federal government like traditional banks and savings and loans and therefore have the ability to loan money more freely. Types of Alternative Financing Options Available Don’t be discouraged if you don’t currently qualify for a traditional business loan. There are alternative financing possibilities that can put cash in your pocket quickly. These lending sources all have different lending criteria so call up the lender in advance to find out if you qualify. Below are some examples of alternative financing options that can help you obtain a lump sum cash advance now. We promise that there are at least 25 funding sources that you will not have heard of. In fact, if you want us to check with our base of over 1000 small business lenders, we can check with hundreds of lenders you have never heard or or even considered that could provide funding. Here is a list of the types of funding available. I am listing the asset that specific lenders will use as collateral on your loan. For example, a lender may loan you money based on the amount of credit card transaction you process in a month, using the future transactions as collateral. BUSINESS-BASED CASH FLOWS #14-Accounts Receivable/Invoices # 1 5 - Purchase Orders #16-Contracts #17-Sales Commissions #18-Letters of Credit #19-Equipment Leases #20-Commercial Deficiency #21-Credit Card Receivables #22-Equipment #23-Commercial Leases #24-Partnership Agreements #25-Royalty Payments #26-Medical Receivables

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CONSUMER-BASED CASH FLOWS #27 - Credit Card Debt/Chargeoffs #28-Consumer Receivables Inheritances #29 -Trust Advances and Probates #30 - Retail Installment Contracts #31-Consumer Deficiency Portfolios #32-Timeshares and Vacation Club #33-License Impounds Corporate #34 - Retirement Plans #35 - Nonperforming or Delinquent Debt COLLATERAL-BASED CASH FLOWS #36 - Real Estate Notes #37 - Business Notes #38 - Equipment Notes #39 - Automobile Notes #40 - Marine Notes #41 - Mobile Home #42 - Notes Aerospace Notes #43 - Secured Nonperforming Delinquent #44 - Debt Vendor Carryback Paper #45 - Warehouse Inventory Lines #46 - Recreational, Motor Home and Business Vehicle Notes INSURANCE-BASED CASH FLOWS #47 - Annuities #48 - Lottery Winnings #49 - Structured Settlements #50 - Viatical/Life Settlements

GOVERNMENT-BASED CASH FLOWS #51- Military and Disability Pensions #52 -Tax Refunds #53 -Voluntary Separation Incentives

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Are you seeking capital for your business at this time? Will peer-to-peer, traditional, SBA or alternative financing work for you? We can help! About Anderson Business Advisors “You have the potential to build your business - We have the access to capital” Anderson Business Advisors helps provide financing and growth capital to companies like yours. While our competitors or your local bank may offer one or two services, only Anderson Business Advisors offer a wide range of financing options to help increase your working capital. We provide fortune 500 level consulting and support to even the smallest of businesses. We specialize in start-ups and credit challenged businesses. We work diligently to provide you with alternative financing solutions in these challenging economic times. Anderson Business Advisors offers a FREE service. Small business owners can receive a FREE business funding analysis to determine exactly what kind of financing is available to them. We pride ourselves on providing you with a straight forward legitimate funding overview with constructive feedback on your business as it is today and offers a realistic expectation of obtaining financing in today’s economic environment. We analyze your situation and then provide you with a written overview showing you exactly what kind of credit and financing you would be eligible to obtain. If we determine you cannot get funding at this time, we will provide you with action steps you can take to become bankable in the near future. If it is determined your business can obtain working capital then Anderson Business Advisors will assist the business owner in obtaining financing. Anderson Business Advisors has well established working relationships with traditional banks, SBA lenders, private investment firms, angel & venture capital firms, and over 50+ alternative finance lenders to help your business. We also have access to a Database of over 1000 lenders that streamlines loan origination through technology, by utilizing private lenders and member banks’ criteria to match your application with ready, willing and able lending sources. One application is filled out and lenders compete for your business offering you the best rates and terms possible. No more having to go to several lenders with your loan package in tow.

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Find out exactly what kind of financing you can receive by calling one of our funding experts today for your FREE business funding analysis.

Call (888) 969-2677 and get started today obtaining financing for your business!

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25 funding sources

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