Angel Investors and Business Loans

October 5, 2011 · Posted in Business, Finance, Investments, Loans 

Regular alternatives to SBA loans are to use angel investors. If you are seeking both equity and debt financing, you may want to work with an angel investor for the down payment required in order to receive the financing that you need. It is important to remember that the typical term of a SBA loan, with an appropriate down payment, is 10% to 20% of the total value of the loan.

A angel investor can act as a cosigner for the SBA loan capital that you are seeking. As such, you may be able to effectively use both investment capital and debt capital in order to launch your business operations. This may substantially reduce the risks that are associated with your business investment. As such, you may want to give a significant amount of thought to working with both a SBA lending bank as well as an angel investor.

This is due to the fact that the small business administration was specifically created to give small business owners the opportunity to receive the loans that they need. Additionally, if you are applying for a SBA loan that it is extremely important that you showcase to your bank or how you intend to create jobs. There are many programs available to you through the small business administration. Prior to seeking financing, you should thoroughly examine your personal financial history and assets. The small business administration wants to see that your business will aggressively create jobs during the first five years of its operation. However, banks and always directly disperse funds to you directly as they would purchase the individual products that you specify that you need in order to launch business operations.

If you are having credit issues after discussing these matters with your banker, SBA loan consultant, or business financing consultant then you should make sure that your angel investor has the proper collateral and financial ability to assist you in receiving a SBA loan. Again, one of the prominent focuses within your business plan should be not only why you business is economically viable but also why both you and your equity investor partner are good candidates for a SBA loan.

Finally, there are going to be several packages of documentation that you are going to need to provide to your SBA loan banker. The financing programs that we have discussed throughout this article will require you to have a complete business plan, SBA loan package, and collateral examination document. Within each of these documents – you should focus significantly on your profit and loss statement, cash flow analysis, balance sheet, breakeven analysis, and business ratios.

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