Funding & Investors
Funding & Investors seem to be a new term being used in the real estate world. Many of the Realtors I work with are not familiar with the term, and as such, do not know what it means when they see it used. There are certain characteristics of this type of funding that should be familiar to all business owners. It is primarily investors who have the capital to invest in your struggling business.
In most cases, they are local individuals who know about the struggles your business is experiencing and want to see it succeed. Investors have both financial and personal capital on their hands. They do this by purchasing your business from you and then using the money to either purchase a property for use as collateral on a loan or to provide you with a loan themselves. These loans are usually referred to as debt consolidation loans.
Typically investors are seeking to receive capital in order to expand or buy additional space within their own company. They may also be looking to take a significant risk on your struggling business to help ensure its long term success. While they are funding you, they will also need to make payments to their lender, which will be reported to you as debt on your tax return. Therefore, you should always keep all agreements regarding any funding or investor relations with your business in writing.
As mentioned above, some of these investors are local people and some are finance brokers. Regardless of who you are, you should always be careful who you provide financial financing to. You never want to give a loan to someone who may decide to foreclose on the property you are financing for them in the future. To this end, it is also important that you maintain any agreements that you enter into with an investor. For example, if you are having difficulties maintaining your current level of production, you may need to delay starting any new projects until you can get back on track.
As you can see, there are many different types of funding sources available to a small business. Depending on your industry and goals for your company, you can choose what type of loan is best for your company. However, you must remember to always consult with your accountant and/or business adviser prior to making any major decisions regarding capital expenditures, loan amounts, etc. You must also remember to always have an open line of communication with your banker, as well as with any potential investors. By keeping these few tips in mind, you should be able to choose the financing source that will be best for your company.
Hopefully this short article has given you some insight into financing & investors. We highly recommend that you speak to a few bankers and business advisers before making any major decisions regarding capital for your business. Additionally, always remember to maintain proper business records, as these can be used to assist your own accountant in calculating any profits or losses that your business may incur. Good luck!