How to Find Private Money Lenders in a Credit Crunch

Credit for start-up businesses and also credit for existing businesses to expand is very tight today. Traditional small business lenders from banks and credit unions have less cash to lend and strict standards that disqualify many who got loans in the past. Private money from rich partners or non traditional investors looking for a better return in today's world are a great source of funds. Terms are different than traditional small business loans and open to negotiation with a rate of return for the investor or a piece of the action. Many old hard money lenders now take some ownership or partner interest to be safer and have a larger upside and some control when investing.

Difficulty: Moderately Challenging

Instructions

1. First to attract and win over a millionaire to finance your business venture you need a track record in what your doing. If you don't have a business track record (and even if you do)you will need a solid, well thought out business plan. You will need to convey your vision and sell your dream to convince private money to back you.

2. Offer a part of the upside. Give a money partner either a percentage of ownership or a part of any business increase their capital investment creates. This works in multiple ways. The money man often has connections and knowledge your company could really use. If he gets part of the return he is invested in actively helping you grow. It is much better to have your money partner working and connecting you with opportunities than an old school banker sitting back and passively waiting for you to succeed.

3. Network with investment clubs, especially real estate investment groups. This is where private money connections are often made. Many investors that come through with large amount of cash are those you least suspect have the funds. 401k , self directed ROTH IRAs and retirement accounts are often large enough to make substantial investments.

4. Look for a mentor and possibly a partnership with business owners of a business related to yours, but larger or more established. Sometimes your parts suppliers or those companies who your business sells to or services is a source of capital. Investing in your business can provide a return but also help their business grow. The business owner-investor also has knowledge and expertise that could make a difference to your bottom line. If they are invested in you they will share ideas and advise you in valuable ways. Advice that would be expensive or impossible to buy.

[goodselfme]

on 11/16/2009 Good information on finding private money lenders.TX 5*