How to Find a Legitimate Private Lender
Starting a business takes two things: money and hard work. If you have lots of energy and no money, you might get there, but it will be quite the challenge. For people with great credit and lots of money, this poses little problem. However, being financially "unstable" doesn't mean you have to give up your dreams, it just means you have to get a solid funding source. The challenge is finding a legitimate private lender.
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Instructions
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Create a business plan. Venture capitalists and angel investors (for smaller scale venture capital) are interested in repayment of their loan. They are primarily concerned with two things: 1) the track record of the management team and 2) future cash flows.
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Begin your search for private investors by going to Yahoo! Finance's "Venture Capital" Web page. (Yahoo! Finance is the most popular financial research site on the Web as rated by Alexa.com.) Take about 30 minutes each day to read up on the latest VC deals. Understand how they are structured. Look at the deal team and the VC name behind the deal team.
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Find a VC or angel investor doing deals in your industry. As you continue to read and familiarize yourself with the private lender (also known as the private equity) market, you will begin to notice a trend in terms of industry focus.
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Create a list of venture capitalists or angel investors in your industry. As you read, take note of the name. Look up the contact information for the firm online. Read as much as you can about each VC and angel investor.
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Decide how you would like to structure the deal. Come up with three pitches of your own for funding. A private lender will want something in return for their money. If you don't have credit, they will accept equity (in your business) and/or tight management control over operations. For example, you can ask for $50,000 in exchange for a 20 percent stake in your company.
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Contact each VC or angel investor you have identified. Send a short (two-page) overview of your request and business idea. Highlight the most important points such as annual cash flow, management team, payback period (how long it will take to turn a profit) on the "Executive Summary" on the first page. Request a meeting to speak with the partners in the firm who service your industry.
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