The Process of Finding and Securing Money

Capital is the fuel all businesses--large or small--need to grow.  ActiveMoney describes the kinds of information you need to gather so that you can decide how, and if, you should finance your business with outside sources of capital.  If you put together a solid plan with realistic financial projections and good reasons why you need the money, you will have a better chance of finding a lender or investor.

The following chart illustrates a process you can use in finding and securing money for your business.  At the same time,  it details what resources this product has to offer in completing each process step.

Step

 Process To Follow

ActiveMoney Resources To Consider
1. Determine precisely how much money you will need and what it will be used for.
2. Determine how much money you, your friends and family have to contribute toward the money needed.  Also, determine how much collateral you may have to commit towards the sum of money.
3. Calculate if you can afford the money.
4. Begin to develop a pricing model for your business if you do not have one.  A pricing model will allow you to begin the development of a sales forecast.
5. Develop a one year sales forecast for the business.
6. Show how and when the money will be repaid.  You will need your pricing model and sales forecast for this step.
7. Create a Strategic Business Plan.
8. Begin to develop a capital strategy.  Begin with the Interactive MoneyFinder which will provide you with a idea of what strategies will be successful based upon the amount of money you need and what it will be used for.  The MoneyFinder will also begin to lead you to potential sources of capital to best meet your strategy.
9. Next, begin looking for capital sources that best meet your strategy.  Begin by reading the Guide To Capital Resources and 20 Tips for Finding Money Now.
10. Review the State and Local Money Sources List to identify any prospects for size and type of financing you are seeking.
11. Based upon what the Interactive MoneyFinder advised you as to a strategy you need to decide whether you are going to pursue debt-based financing such as a bank loan or pursue equity-based financing such as Angel or Venture Capital.
12. If you are going to pursue debt-based loans* you will need to prepare a loan package and better understand the lending process and credit scoring.  Also, you will need to complete a loan application and decide if there are any government money programs that might help you guarantee your loans.
13. If you are going to pursue equity-based capital you will need to better understand the Angel or Venture Capital Process.  You may also need to prepare a Private Placement Memorandum if you are going to sell stock in your business.
14. If you are not-for-profit based you will want to consider exploring grants and the various community foundations.
15. Once you are successful in securing your funding, you need to begin implementing policies and procedures for managing it. 
16. Begin to research and implement a formal system for accounting for your money if you have not done so already.

Red hyperlinks require an internet connection.    *All loans and lines of credit are subject to credit approval.