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Looking For An Investor Or A Lender

This is a challenge that we run into all the time, as a leading alternative funding marketplace for all types of businesses.

You’ve had a flash of brilliance...

The business owner has tangible revenue and a business model attaining some degree of success. They have a brilliant idea for how to exponentially grow their business. They even conduct some successful testing of this idea - getting one or two existing clients to sign up, or selling this new product or service in a small test group.

Now, they look to us for lending against the new potential scope of their business. They want us to look at what their revenues will look like in six, twelve, or twenty-four months. If only they had enough working capital right now to take their prototype to a fully operational product, or if they had enough staff to sell and deliver on the new service, or if they could just lock up the warehouse space needed to house and ship all of this new potential product…

Sometimes it pains us to do so, but we need to stop these business owners right in their tracks.

Are you looking for a lender, or an investor...

A lender is only going to make a funding decision against something tangible. Your business is running at a certain revenue level - history has proven that it’s able to do that. Your business has the capacity to repay debt at that historical level, so lenders become comfortable providing capital to that business owner because the capital fits within that business’s revenue structure.

 Here’s the key... 

Regardless of whether your growth or expansion is successful or not, the underlying aspects of the business can handle the loan repayment.

An investor is speculative, meaning that they are investing in the future of you and your business. They’re also getting an equity reward for doing so. They might be getting preferential terms on the payback, plus equity, as there’s a lot more risk. With an investor, that’s why equity is involved, rather than just a contractual rate of return.

So when business owners come to us and say, “Hey, here’s this amazing extension potential for my business; we’re just looking for $150,000 to get it started,” that’s when you need an investor.

An investor may make a lot of sense if...

While this concept is pretty black-and-white, there are also other reasons to take on an investor, rather than a lender. For example, if the investor can add intangibles to your business like industry expertise, their professional network, their notoriety, or their distribution channels, those are legitimate reasons to seriously consider adding an investor rather than seeking out a lender.

More times than not, though, you won’t have a Mark Cuban in your personal network, so alternative loan solutions make sense for most small business owners.