When Looking for Investors, Tread Carefully Around Angels

There are plenty of studies floating around the Internet that suggest that banks are hesitant to loan money to entrepreneurs. That is unless they don’t really need it. No surprise there.

Angel investor

One of the studies, conducted by Florida Atlantic University College of Business, noted “bank lending to small businesses … is still depressed several years after the end of the U.S. financial crisis that started in 2008.”

So what should an entrepreneur do? Definitely explore alternative sources of debt financing. More on that later.

What should an entrepreneur not do? Sell a piece of their company to an angel investor to finance their business.

You might as well call them devil investors. What many angel investors do is take advantage of your time of need, snagging a piece of your company. This will likely be far more expensive than any debt financing you might obtain.

There are two exceptions to my utter disdain for the angel investor. First, if the angel brings contacts and verifiable ways to grow your business, then he or she deserves consideration. Second, be open to his or her investment if the angel is willing to accept a provision in the contract that would allow you to convert that equity to debt financing.

Ideally, you wouldn’t even have to go down this path. Burns Funding has nurtured a raft of ways for entrepreneurs to secure capital.

Better Leverage Your Personal Credit

At Burns Funding, we help you leverage your own personal credit to raise the necessary capital. One way we have done this is by institutionalizing the bridge funding process. This helps you reduce credit card debt, improve a critical ratio and gain a higher credit score. This allows you to secure more capital at lower interest rates, in some cases as low as zero percent interest.

Our programs don’t end there, either.

Cost Segregation Studies

Yet another of Burn$ Funding’s tools is the use of cost segregation studies to generate capital.

A cost segregation study identifies aspects of property that can be placed on accelerated depreciation life cycles, potentially resulting in huge tax savings for eligible property owners.

One of the first questions that comes to mind when I tell a small-business owner about it is, ‘Is it legal?’. Yes, cost segregation is perfectly legal and IRS-compliant. The IRS has even published guidelines for a proper cost segregation study on its website. Even better, it is a painlessly easy process for the property owner, with the help of an experienced professional.

While the modern application of cost segregation can be traced most directly to two landmark 1997 court cases, we were the first to tie cost segregation studies to other business ventures back in 2005. Today, Burns Funding has partnered with the industry’s leading professionals in the field to maximize the potential of this tool.

Blanket Loans – Consolidate Many Loans into One

Blanket loans are ideal for entrepreneurs. There are countless benefits, too numerous to fully address here. But I’ll single out a few.

By consolidating many loans into one, you can free up capital that resides in the individual loans. This can also lead to interest expense savings, since the interest rates of some of the individual loans may be higher than what the rate would be on a blanket loan.

This solution also dramatically simplifies the borrower’s servicing of the loan, which is of great importance to entrepreneurs, who are already busy with personal and business priorities.

Finally, the byproduct of using this product is typically a dramatically improved credit score, creating a multitude of other capital-raising opportunities for the doctor to invest in other properties.

Burns Funding has access to a unique menu of banks and financial institutions that have enabled the company to emerge in 2019 as a powerful resource for entrepreneurs when the banks say no, and you need alternative sources of debt financing.

Shares

Leave a Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.