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Can’t get Venture Capital Financing. Look at These Options

Many business owners try to finance their growing businesses by going to venture capital or angel funding groups. Although both financing options provide a great way to finance a business, they are usually hard to qualify for. And furthermore, they all require that you give up some business equity in exchange for funds. That, needless to say, can be a very steep price to pay.

There are some business financing alternatives that can allow you to finance your business, almost as effectively, without having to give up any equity. As opposed to venture funding or angel funding, these options are easy to qualify for and do not require the endless documentation and due diligence that venture money requires..

However, these can only help you if you meet the following criteria:

1. Your business is established and has commercial (not consumer) clients

2. Your business invoices between K and 0K per month

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These alternatives will help you if:

1. You need money to meet payroll, pay rent or pay supplier

2. Your customers pay you in 15 to 60 days

3. You need (or wish) your customers to pay you sooner

Your first option is called factoring (also known as invoice factoring). Factoring is ideal for businesses that cannot afford to wait 15 to 60 days to get paid by their clients. Factoring provides you with financing that is tied to your invoicing. Basically, the more your company invoices, the more financing you qualify for. This enables you to grow your company – many times exponentially – without having to give up equity.

Your second option is called purchase order financing. It works well for re-sellers, distributors, traders and wholesalers. Purchase order financing is ideal for business owners that have a large purchase order in hand, and who cannot afford to pay their suppliers to deliver the product. PO financing enables you to get a letter of credit, backed by the financing company, to pay your suppliers. This allows you to deliver on the purchase order and effectively make the sale. Usually, very little – if any – of your money is required for the transaction.

Both alternatives are easy to qualify for, take days (or a couple of weeks at most) to set up, and when used correctly allow you to grow your company exponentially.

Find More Venture Capital Established Business Articles

Corporate Financing – Educational Training Program Options

The financial status of a business or organization is extremely important to their success. Students can step into corporate finance schools and degree programs to exclusively study how to work with businesses in this capacity. Educational training program options for corporate financing are available at several levels.

The financial activities of a corporation have to be monitored and managed in order to keep a concise record of all monetary funds. Training teaches students to properly work with finances to ensure stability and minimize any risks associated with spending and investing money. Educational programs are widely available at the bachelor’s, masters, and doctorate’s level of education. Programs at the bachelor’s degree level offer training specifically for corporate financing. Students that desire to pursue an advanced degree at the graduate level need to enroll in a finance program with a concentration in this field.

International marketing, accounting, financial reporting, and organizational psychology courses are some main topics studied in a bachelor’s degree program. Students will find that most programs award Bachelor of Science degrees that take approximately four-years. In this introductory program, common courses may include:

*Intro to Corporate Finance

Students study the roles of professionals, which include management and investment decisions. Students learn how businesses raise money for different investments and what risks are involved within that process. Subjects such as valuation, financial strategy, venture capital, and dividend return are all explored through a course like this.

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*International Corporate Finance

Financing is explored for businesses that have international work. Students study the procedures for global investment and finance. The management of finances inside today’s high global competitiveness is examined as students learn about multi-national budgeting, debt service, and interest rates. The finance practices of America are contrasted with Europe and Asia.

*Financial Strategy

The evaluation and prospects of a finance strategy are extremely important to ensure success. Students will work through topics that explore how major investments are made. The calculation of risk and the chance for monetary growth are main areas studied within this type of course. The ability to create and implement a financial strategy that is competitive is also learned.

Several career opportunities are open to students that complete a bachelor’s degree program. Students can step into positions as stockbrokers, fraud investigators, investment bankers, and financial reporters. Each of these career options train students to work directly with corporate financing.

Further education at the graduate level provides students with advanced skills and knowledge that helps them obtain executive careers. Many areas such as real estate, risk analysis, valuation, and record keeping are looked at to prepare students for the field. Different markets and global organizations are also discussed. These finance areas are typically explored through different concentrations. Major curriculum areas can include revenue optimization, financial engineering, and international monetary policy. Becoming a bureaucrat, auditor, or a professor are all career options for students that finish graduate training.

Corporate financing schools and colleges open up many opportunities for students. Educational training is available at many accredited schools so students should choose programs that prepare them for the industry. Accreditation is awarded by agencies like the Accrediting Council for Independent Colleges and Schools (ACICS) to programs that meet all of the criteria and supply a quality education.

DISCLAIMER: Above is a GENERIC OUTLINE and may or may not depict precise methods, courses and/or focuses related to ANY ONE specific school(s) that may or may not be advertised at PETAP.org.

Copyright 2010 – All rights reserved by PETAP.org.

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Business Financing in the UK

Running a business and becoming successful in that venture requires a lot finance and financial assistance. In UK finance for business can be got from different sources. Business related financial services are provided by many organizations in that field. UK finance for leasing a company or organization, UK finance for debt collection, UK finance for Venture Capital can also be arranged.

There are companies that help a business in hire purchasing and arranging for leasing. You can approach such dedicated companies for such services. UK Finance for hardware funding for the information technology business is also available in companies. Leasing services for small businesses, agricultural and industrial funding operations are available in companies dedicated to that service. A company called Richard Mares Asset Finance in UK finances for agricultural and industrial setups. If you need information on UK finance for equipment leasing, mortgages and commercial finance then you can approach companies like 1st Leasing Company and 1pm.co.uk. Many options for UK finance are available with them. Just check out their website for more details on the different types of finance available with them. For UK finance from £5,000 upwards you can approach companies like 1pm. They work closely with their clients to provide what they need.

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UK Finance for companies in the information technology sector can get their financing options from companies like Corporate Computer Lease Plc in UK. Such companies make IT more affordable and you get the UK finance for almost any technology spends. They have successful records of financing in UK for even Fortune 500 companies. This is one of the fastest growing UK finance companies.

Companies like Corporate Business Finance fund you for Plant, Machinery and for other corporate financial services. They provide finance in UK for many services like hire purchase, leasing, operating leases, factoring, release of capital, and commercial mortgages. Each and every business may need a unique funding requirement and it is a tedious task to arrange for funding when you need to run your business. A lot of time is wasted in searching for proper funding. Under such circumstances you can approach companies like these for UK finance for your funding requirements.

For new start ups it is difficult to get finance in UK or elsewhere. Most of the finance companies will fund only the established businesses. But companies like Oak Leasing help even the start ups since they understand the difficulties that the startups face. The problems that the start ups face are only initially. If they have a proper business plan they could come up. The team at Oak leasing would finance your startups and for any new equipments that you need. More details are available in their website.

There are companies that fund only the big companies. Finance for big companies is given by UK finance companies like the Benington Securities. It is a private enterprise brokerage. They cover only the corporate investments. There are many companies that provide UK finance for even individuals. Companies like Troman finance provide funds for the individuals and small business firms.

Find More Venture Capital Business Plan In Uk Articles

Financing Your Dream Business – How To Raise The Capital Needed (2)

One of the greatest challenges when starting a dream business is the raising capital needed for the business to hit the road. This is a great challenge to all entrepreneurs setting out because, they are incapable to acquire loans at the beginning stages. You cannot blame the banks much for two  principal reasons. First of all, the beginning stage of every business is usually an uncertain period laden with risk. Secondly, the entrepreneur at the beginning stage lacks the experience, the discipline and essentially, the financial perspicacity to profitably run and repay a loan at that stage.

As a beginning entrepreneur, it is important to overcome this hurdle and let your dream materialize. George Bernard Shaw once said, “The people who make it in this world are the people who get up and look for the circumstances they want and, if they cannot find them, make them.” Like George Shaw rightly said, it is the obligation of the entrepreneur to ascertain the options for raising capital to start his dream business and choose the best. There are some available capital sources. Most entrepreneurs coalesce two or more of them at beginning stage. In this article, I wish to tackle three of the sources of start-up capital, their merits and demerits

Venture Capital Fund.

This source of capital for starting a dream business is usually appropriate for entrepreneurs who have bright ideas of putting up innovative products and even have lucid models to show to all and sundry, but unfortunately, because they do not have the resources, assets and lack the experience required to start the business, banks are not ready and willing to give them loans. The venture capital fund is usually set up by the government, a group or an individual to finance new and mostly high-risk businesses.

Merits
1. It is totally dissimilar from the loan system and well thought-out to make right some of the short-comings identified with loans.

2. The venture capital fund primarily caters for specific projects or stage of a venture at a time, making it specific in nature. Simply put, you get the exact fund for the exact project.

3. Not only do you get finances from this set-up, but also the venture capital system has the people with the requisite expertise to assist in running your firm, usually if you the visioneer lacks the practical know-how in running the business.

Demerits
1. Because of the high-risk associated with the nature of the projects they help finance, their probable profits or interests tend to be high. What do you expect?

2. Sometimes, the venture capitalists are resolute on the business, therefore put into practice decisions which tend to smoothen the progress of their early exit from the business they assist, which may not be in the interest of the business in the long round.

Leasing.

Are you starting a business and lack the necessary tools needed to set the business into motion, because those tools,machines or equipments are too expensive to acquire? Then this type is for you! Leasing is a loan system where loan facilities are fixed with the securing of an exact equipment or machine. Basically, there are two types of leases. The operating lease and the finance lease.

The operating lease is where the lessor – the leasing company owns the equipment or machine all through, and the equipment or machine goes back to the owner after the lessee completes the lease. However, with the finance lease, the lending firm owns the equipments with the user all through the lease period and after payment of an outstanding amount, the lending firm hands the equipment over to the lessee.

Merits

1. The entrepreneur does not need to fret over how to acquire all the expensive equipments required for the commencement of his business when capital is needed for other stuffs. This, sort of bring a major relief to the entrepreneur.

2. Also, in the event of the project not working out as expected, the entrepreneur can “walk out” and the equipment will go back to the owner who can decide to put it up for sale. As simple as A,B,C,D.

Demerit

1. The major disadvantage is that, the entrepreneur bears the greater part of the cost of repair should the equipment breaks down when in use by the lessee or when it is in the possession of the entrepreneur.

Equity investors.

In the world of business, there are an incalculable number of people who are more than willing, and looking around for businesses showing potential signs of massively doing well to invest in. If the entrepreneur, therefore, is able to come up with a project with high financial potential, he is able to draw such people to purchase equity or be a major shareholder in the company right from the on-set.

Merits
1. This system enables the business to grow speedily enabling the entrepreneur to dodge the stress and anxiety that comes with repayment of loans.

Demerits
1. The entrepreneur is robbed of his total or full control of his business.
2. There is usually too much interference by the equity-holders.

For more on how to finance your dream business with ease, please CLICK HERE.

Long-Term Financing Policy, Capital Structure, Risk Management Policy and Acquisition Analysis

Cooper executed several acquisitions to expand its business and broaden its diversification to gain market share. Cooper’s management was highly concerned about their need to diversify since they relied heavily on the sale of oil and gas tools to industrial customers.

Likewise, earnings volatility was caused by the cyclical nature of heavy machinery and equipment sales. Regrettably, the effort to reduce the earnings volatility for Cooper Industries was not successful since sales were entirely concentrated the same industry. By 1959, Cooper ceased operations in four of the acquired companies that broadened their market, yet they did not satisfy the need to diversify the company. In order to avoid any more ineffective acquisitions, Cooper developed three criteria that must to be met for all future acquisitions, Cooper Industries, Inc.- Case (1974). Industry choice should permit Cooper major player status · Industry should be stable and enable sales of “small ticket” items.

Industry leading firms would be acquired Only acquire industry leader Cooper implemented these criteria by acquiring Lufkin Rule Company in 1967. The new strategy would ensure that Cooper’s acquisitions benefited them and their shareholders. Cooper’s next step was to acquire Nicholson File Company [Nicholson]. This paper is going to further expand and analyze this acquisition. Meeting the Criteria Nicholson as one of the largest domestic manufacturers of hand tools, led in its two main products areas: files and rasps. It had 50% share of the million market for files and rasps where they had established excellent reputation for quality and brand name. Its hand saw and saw blades also had excellent reputation for quality and held a respectable 9% share of a 0 million market. Nicholson’s best asset, their distribution system, gave them a competitive advantage that was attractive to Cooper.

Aside from these attributes Nicholson was in financial trouble. Their common stock was trading at to per share well below its book value of .25 per share. The company reflected a low price-earnings ratio of 10-14 compared to 14-17 times earning for other leading hand tool companies. Every aspects of Nicholson’s business met the acquisition criterion that was previously established by Cooper.

Benefits of Acquisition

Cooper analyzed the benefits of merging with Nicholson. Cooper estimated that Nicholson’s cost of good sold could be reduced from 69% of sales to 65%. The acquisition would eliminate the sales and advertising duplication, which would lower the general and administrative expenses from 22% of sales to 19%. In addition, “75% of Nicholson’s sales were to the industrial market and only 25% to the consumer market” (page 5) compared to the inverse for Cooper, since they distributed between the consumer market at 25% and industrial market at 75%.

Synergies

Synergy can be defined as the value that is created by combining companies, which yields a result greater than the value of these companies as separate entities. It is important to recognize the synergy that existed with the two corporations. The acquisition would provide a greater marketability for both of these companies. Both of these companies will improve their profit margin by working together instead of as competitors. When companies are acquired, competition should be reduced giving companies better opportunities to advantageously control price. In addition, the acquisition will provide growth. With each of these product lines, both of these companies together can achieve greater sales expansion. Improved distribution methods by Nicholson to Cooper would reduce operating costs to the venture as a whole.

Capital Structure

Cooper Industries should structure the deal to finance the acquisition of Nicholson. Cooper has capital structure options to finance this acquisition. They can issue debt, arrange lease financing, bond swapping, offer preferred stocks, warrants, convertible bonds and callers. These selections offer investment options for Cooper.

“Typical financing decisions include how much debt and equity to sell, what types of debt and equity to sell, and when to sell debt and equity. Just as the net present value criterion was used to evaluate capital budgeting projects, we now want to use the same criterion to evaluate financing decisions” A five-year projection (Exhibit H) has been created to demonstrate the desired progress toward the projected goal of this acquisition in regards to the synergies. Appendix A illustrates the combined financial statements without synergies in detail. In 1972, the true effect of the acquisition is felt with the increase in net income and then leveling out as the year’s progress. Earnings per share were greatly impacted by 1972. This merger also impacts long-term debts. In order to acquire Nicholson File Company, Cooper Industries would have to look for a way of long-term financing, thereby increasing its debt and debt/equity ratio.

The Cooper/Nicholson acquisition has a positive impact on both companies and it is believed that the two companies have great synergistic value. The acquisition will not only reduce operating costs but it will also reduce additional selling and administrative expenses, as well. The SG&A expenses should decrease by 10% the first year and should experience no increase in them in years after. Revenue too had a 5% increase and it too stabilized into having a consistent increase of 8% every year. The 5-year projection after the acquisition provides a positive glimpse for the future.

Pursuant to due diligence, we have compiled the following report evaluating these financing options:

· Exhibit A Income Statement Balance Sheet without Synergies

· Exhibit B Income Statement Balance Sheet with Synergies Financing With Bonds

· Exhibit C Income Statement Balance Sheet with Synergies Financing with Cooper Common Stock

· Exhibit D Income Statement Balance Sheet with Synergies Financing with Cooper Preferred Stock

· Exhibit E Summary Combined with Synergies Financing With Bonds

· Exhibit F Summary Combined with Synergies Financing With Cooper Common Stock

· Exhibit G Summary Combined with Synergies Financing With Cooper Preferred Stock

· Exhibit H 5-Year Projection Income Statement and Balance Sheet

· Exhibit I Net Present Value Calculations

This team of authors recommends a bond issue as the preferred capital financing structure for a variety of reasons. Debt capital used more than equity capital causes a higher debt to equity ratio, partners.financenter.com (2004). As this ratio increases then the financial leverage of the business increases to a point. The maximum ratio of debt to equity is achieved when a firm can no longer service its debt. The inability of a firm to service or pay its debts is termed as insolvent. Debt capital, the assumed interest rate of 8% is used, with a twenty-year term and a sinking fund for future debt retirement over the term of the debt commencing in year one or 1972.

This usage of debt rather than equity to finance the acquisition of Nicholson causes a greater return on shareholder equity since the use of other peoples money (OPM) causes a magnification on return of the existing capital structure. If the Firm were to issue more stock in lieu of debt then the existing equity structure would be diluted and the return on shareholder’s equity reduced. The objective of the Firm would be to maximize shareholders’ wealth and debt-financing structure achieves the objective better than the issuance of more shares of stock. Another cause for debt issue for the financing is linked to the United States Tax Code allowing companies to expense interest expense as a financing expense accounted for in the statement of cash flows where it is deducted from net income before taxes prior to federal income tax calculation. The boon of tax benefit is not available in many other foreign nations where interest expense is not a tax preference item.

Therefore, the 8% interest expense will reduce net income before interest and taxes dollar for dollar and subsequent income taxes at 34¢ on the dollar of earnings before interest and taxes. Furthermore, as the Firm grows, the debt to equity ratio will probably change assuming profitability and the assumptions are mainly correct. As profits are generated over time and they are kept in the Firm in the form of retained earnings at that point in time will have dropped and the total equity in the company will have grown. This is exactly what most companies look for in a merger or acquisition.

Since the acquirer and Nicholson are both companies heavily laden with inventory and that inventory needs to be financed either by cash or accounts payable to the extent that this case was analyzed prior to the new Wal-Mart/Dell Computer method of working capital financing. In this model, the vendor does not bill the purchaser (Wal-Mart or Dell or the Firm) prior to purchase but the customer thereby avoiding the need to finance. In the case of the Firm, inventory is a requirement. Depending on the industry and to the extent that cash is generated by it leveraging is needed more or less. In other words, the more cash generated from operations the less leverage required during the operations of a company notwithstanding the acquisitions. To the extent that the bond underwriters will issue bonds and the bonds will be graded (priced) to the extent of the debt to equity ratio, solvency and future value is key.

That key is the cost of capital. The team of authors have assumed a rate of 8% annually flat over the 5 year pro-forma.

Guy McCord, MBA, CBC turnaround specialist with small closely held businesses, expert in consumer driven health plans, deferred compensation, asset protection, property and casualty insurance, commercial landscape, industrial staffing, staffing, dallas, fort worth, austin, houston, http://www.landstartexas.com

One of the most important parts of the venture financing process is negotiating the term sheet. Although only 2-3 pages long, term sheets contain summaries of the critical aspects of a financing. Listen to a simulated negotiation between a VC and an entrepreneur, followed by a discussion on the most important terms. Recorded: February 25, 2009
Video Rating: 4 / 5

More Venture Capital Term Sheets Articles

The Advantages of Factoring Over Other Types of Business Financing

There are a variety of financing options for companies that need capital. Angel investors, bank loans, venture capital and credit cards are all available options. While each of these has their advantages, there are also many disadvantages associated with them. Businesses must consider these before choosing one of the above options. Amongst the most notable disadvantages, include the fact that it may be difficult for companies to qualify for a number of these types of loans. In the case of credit cards, the astronomical interest rates can cause a business so much money that it becomes very difficult for them to repay. One option that may not be used as often as it should, and which can be an especially advantageous small business financing option, is factoring.

Factoring is fast, doesn’t require that a business have a good credit score, is available even for new companies and poses less risk then many other financing options. Below, we will discuss the advantages of factoring a little more in-depth. Before we begin, it is important to briefly explain what factoring is.

Factoring essentially involves a company selling their invoices or receivables to what is known as a Factor. A Factor purchases those invoices at a discounted rate, collects the invoices from the company’s clients, returns the balance and then receives a pre-determined fee. Factoring, or invoice factoring, is an excellent option for businesses that have not been operating very long, or that have poor credit. These are not the only types of companies that can benefit from this type of financing, but they may be the ones most grateful for its availability. This is because it can be difficult for businesses which haven’t been around for long or that don’t have the best credit, to qualify for a bank loan or angel investing. Venture capitalist may also shy away from them if their profit margins are not high. As a result, these companies have few options when they are in need of cash.

To fully understand why invoice factoring is such a great way for companies to generate capital, let’s discuss its advantages.

The process is fast: A company will be able to collect money for their invoices within seven days, often times in as little as 24 hours.

A businesses credit score is inconsequential: It doesn’t matter if a company has a credit score of 400 as long as their client’s credit scores are high. If their clients have good credit a company will be able to use factoring as a funding option.

It is an available option for new companies: Even if company is just starting out, as long as they have clients that owe them money via invoices then they will be able to generate capital in this way.

Less risk: A company that uses factoring is leveraging previous work or products sales. They are not securing a loan with any type of property, equipment or their business, which means fewer risks. Sure, there will be fees if a factor is unable to collect or is unable to collect in a timely manner. However, there is less risk to a company that chooses to use invoice factoring, then one that takes out a bank loan.