Angel Investors

From the entrepreneur’s standpoint, there are two major difficulties with obtaining angel financing: how to find the angels in their local community, and how to handle the negotiations. 

Finding them is difficult because, in the past angel, investing has been done on an extremely informal basis. The entrepreneur’s company was referred to the angel through a mutual friend or business acquaintance. And angels do not seek publicity for their investment activities, for fear they will be overwhelmed with entrepreneurs seeking capital. There are no reliable directories of individual angels as there are for venture capital firms. For the entrepreneur, this means that the best way to find angel investing is through diligent networking in their local business community, attending events and letting people know that the company is seeking financing. Contacting angel networks, and participating in angel online matching services, both described below, are additional ways to meet angel investors.

It has often been stated that angels do not have as much expertise with negotiations, especially with establishing a value for the company’s equity, as venture capital firms might. They may not have standard contracts or terms to present to the entrepreneur. It is important that the entrepreneur has an experienced attorney to consult with during the negotiation process.

Angels are remarkable in that they invest in companies at the riskiest stage of all, before the company has reached enough milestones to be able to say with confidence it will survive, let alone become a thriving, valuable business. Experienced angels know that they will likely not make money with the majority of businesses they invest in. But finding a “winner” can mean extraordinarily high returns on their invested capital, along with the satisfaction of watching a company they assisted grow and become a force in the marketplace.

Angels want both types of “returns”: financial plus a feeling of making a positive contribution. Entrepreneurs who wish to entice angels into investing must make sure they appeal to both these needs.

It is a mistake to not view angels as professional investors. They did not become millionaires by making naïve investment decisions. Entrepreneurs approaching angels need to be as thoroughly prepared as they would when approaching “professional” venture capital firms.

Another mistake is believing that there is an angel investor for every conceivable business idea. A business that will never be able to do more than provide a good living for the owners is not a suitable candidate for angel investment. They seek companies that have a good chance of growing rapidly, gaining significant market share, and have barriers to competitive entry—pretty much the same thing venture capitalists look for.

Angels do not want to invest in a yogurt shop in the strip mall. Now if you came up with a new formula for yogurt that could be franchised, it might be a different story.


According to the SBA there are no federal grants available for businesses. Most grants by private foundations are to non-profit organizations. There are some programs that make the grant to the non-profit organization, who then hires a for-profit business entity to complete the work or research specified in the grant. When you see headlines that say some well known company got started with government money, what they mean is that the company got an SBA loan, not a grant. Article continues below. 

SBIR, Small Business Innovation Research Grants

These grants are by the federal government for research and development in the private sector by independent companies who are not dominant in their industry. The person applying for the grant must work full time in the company receiving the grant. There are two phases. Phase I and Phase II, only those companies who have already received a Phase I grant are eligible for Phase II grants. Grant amounts range from $50,000 to $500,000 and are competitive.

Department of Health and Human Services National Institute on Aging 
National Institute of Allergy and Infectious Diseases 
National Institute on Arthritis and Musculoskeletal and skin Diseases 
National Institute on Diabetes, Digestive and Kidney Diseases 
National Institute on Neurological Disorders and Stroke 
National Institute on General Medical Sciences 
National Heart, Lung, Blood Institutes 
Public Health Service 
Bethesda, MD 20892

Department of Health and Human Services 
Division of Injury Prevention and Centers for Disease Control 
Public Health Service 
2545 East Paces Ferry Road, NE 
Atlanta GA 30305 

National Center for Research Resources 
Grants and Assistance, Agreements Section 
Division of Food and Drug Administration 
Public Health Service 
HFA-520 Room 3-40 Parklawn Building 
5600 Fishers Lane 
Rockville, MD 20857 

Financing Programs

Joint Venture Partners

A joint venture partner, or strategic partner, is sometimes overlooked as a possibility of funding. What is a strategic or joint venture partnership? It’s when two companies combine efforts to obtain a goal that would be difficult for either one of them to achieve individually. 

For example: You may have the product and the other company the distribution system in place to reach potential customers. If you jointly market the product, both of you win. You don’t have to fund the costs of reaching the potential customers; the other company can broaden its product offering, and therefore value, to its customers by offering your product. That company doesn’t have to fund the research and development costs of a new product.

Another example: You have a product that requires injection molded plastic components that are produced by expensive specialized custom equipment. Normally a company that provides the injection molded plastic components would charge a hefty fee to build the custom equipment, and also charge you for every part produced. A strategic partnership might mean that in exchange for not paying for the custom equipment up front, you will pay the plastics company a small fee, similar to a royalty on your sales for a limited time period. You win, because you don’t have to invest cash in equipment and the plastics company wins by having a revenue stream greater than the custom equipment would generate.

One more example: Your product has customers in several different markets and can be used for several different purposes. Let’s say it’s a new kind of applicator for creams, lotions, soap, and medications. Another company has a lotion for the treatment of skin irritations available by prescription only. You sell the exclusive rights to use your product to apply prescription lotions to that company. Since you have several other major markets for your product, giving up one, the application of prescription lotions, won’t have a material effect on your future, and you get much needed cash now. The other company now has a product that helps in its brand identification and sales.

One last example: You have a customer database that has been successful in selling your products. You offer a company that has similar, but not competitive, products the usage of your database in exchange for a percentage of the sales generated.

To find a potential joint venture partner look in your industry trade journals for announcements. Search business newspapers like the Business Journal Look for companies that provide complementary products or services to your own company, or those in a market that would be appropriate for your products. Attend trade shows. And of course search the web.

Debt Consolidation and Management

More about debt consolidation . | . Should you pay off credit cards with debt settlement . | . Credit Counseling Choose the Right Credit Counseling Service for You

Debt can be a lifesaver in an emergency situation but many people are drowning in debt. Unfortunately some of us think that an available balance on a credit card is the same thing as cash in the bank. If there’s enough credit to go on a cruise, buy those expensive shoes, or go out to an elegant restaurant, well why not, we all deserve it.

Breaking down a $6,999.99 set of new living room furniture into easy monthly payments of $249.00 makes it easier to swallow. And what about that new car you’ve had your eye on? Never mind the price tag of over $20,000, it’s only $389.00 a month. And suddenly you’re facing a credit crisis. Your paycheck will only stretch so far and those “easy” monthly payments are pushing you under water.

Don’t try to ignore the problem. Recognize there is a problem and that a debt consolidation and management program may be your solution. Debt management is simply a way to take all those credit card balances, personal loans, monthly payments and refinance the total with a new loan and often lower monthly payment.

It’s difficult to do this by yourself. Often your creditors won’t take your efforts seriously and that’s where a debt consolidation and management company comes in. The company can negotiate with all your creditors develop a new loan and debt repayment schedule for you.

It’s something to consider if you’re drowning in debt.


Pay Day Loans arre an advance against your future paycheck. Find out more.

Traditional loans can be broken into two categories: conventional bank loans and special development loans.

Conventional Loans

When an established company needs capital, a bank loan comes first to mind. Banks want to lend to companies that have a record of profitable operations, that generate cash flow sufficient to repay the loan, and that have enough collateral or assets to secure the loan. A clean credit record for both the company and the principals of the company is mandatory; few late payments, and no bankruptcies or foreclosures. Article continues below.

Most start-up companies do not quality for traditional bank financing unless the founder has the personal net worth and income to guarantee the loan. The loan then is a really a personal loan to the founder rather than a business loan.

Check with the bank that you have your business accounts with for the person who handles commercial or business loans. You will be asked to provide financial statements for both you and your company for the last several years as well as tax returns. You may also be asked to provide documentation as to the accounts you have, both personal and business. A business plan will be required and you will most likely have to complete the bank’s own loan package.

You will have to personally guarantee the business loan, which means any and all assets you have will be pledged to pay off the loan if your business doesn’t. If you live in a community property state, your spouse must also personally guarantee the loan.

First Tip: The acquisition of a bank loan takes time, as with any form of financing. Begin the process of finding a loan several months, at least, in advance of when your company needs the capital.

Second Tip: In looking for a bank loan, you are really approaching a vendor (the bank) to see if you want to buy his product (money). Don’t approach the situation like a starving peasant who desperately needs food (funds) to stay alive. The bank needs you or it has no revenue (except of course for the exorbitant amount of interest it earns on VISA cards).

Credit Cards

Credit cards can be a blessing and a convenience but they can also get you into financial trouble if you aren’t careful.

Always Compare Credit Cards and their fees, interest rates, annual membership fees, and penalties, before making your final choice. How to find the right credit card for you. What to look for. Should your business have a separate credit card? Does your student need a credit card?

You can get credit cards with bad credit or no credit, but they aren’t cheap. The application procedure is more involved than for those who have good credit. Most likely you will have to show proof of income through steady employment. This is understandable since you’ve already shown you’re a bad risk for credit.

Some companies offering credit cards to those with poor credit will only do so on a secured basis. You deposit a specific amount, say $1000.00, into an account with the company and they grant you a credit card with a $1000.00 credit limit. In some ways this is more like a prepaid debit card than a credit card, but at least you’ll have the ability to shop online and charge purchases.

The option of an unsecured credit card is available but at very low limits, usually less than $1000.00. As you use the card and make prompt payments your credit limit will gradually be increased.

NO matter what credit card, loan, or mortgage you qualify for, protecting your credit is important. And that means protecting your identity.

So Many Choices So Many Credit Cards: How Do You Choose?

You need to ask yourself several questions to decide what kind of card is best for you.

What will you use the card for?

If it’s for every day purchases and conveniences then a card that has rewards might be more attractive to you. Some cards offer a yearly summarization of purchases by category which can help you budget as well. Article continues below. 

Will you pay off the card every month?

If so, a high interest rate isn’t as important since there won’t be a balance. Try to get a card that doesn’t charge an annual fee. You also want a card that doesn’t charge interest from the date of purchase, or one that has a grace period of up to 30 days before interest charges begin. If you carry a balance every month or plan on transferring another card’s balance to your new card, then low interest rates are important.

Will you be using the cash advance feature a lot?

Then obviously you want a card that doesn’t have restrictions on how much or how often you can get cash. You also want a card that doesn’t have additional fees associated with cash advances, or a per transaction fee. Some credit cards also charge a higher interest rate on the cash advances to compensate for missing the merchant fees from purchases. Many cards apply payments to those charges that have the least amount of interest being generated first and don’t apply the payments to the cash advance portion until everything else is paid.

Do you travel?

If your schedule includes a lot of travel you might want to consider a card that has a cash back feature. Hotels, restaurant meals and airline tickets can add up fast. Of course keep in mind the interest rate as well, unless you pay off the balance every month. Some airlines offer their own branded credit card under the Visa or Mastercard logo and then offer bonus mileage whenever you use their card.

When you apply for a credit card no matter which one, you need to look carefully at and understand the terms for the credit card. Make sure you know what the interest rate is, the annual fees, transaction fees, and any balance transfer fee. It’s also important to know when the interest charges start, how a late fee is calculated and the penalties if any of late payment.

make money at home