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Finding Lease Financing |
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All kinds of organizations, from banks and traditional financial companies to equipment manufacturers and dealers, offer lease financing. Of course, each source has its advantages and disadvantages, so it's in your best interest to understand your own financial needs and then match your needs with lease financial sources that most closely meet your needs.
Looking at the big picture, three major sources of lease financing exist: captive leasing companies, independent leasing companies, and banking institutions. In this article, we take a look at each source.
Captive teasing companies
Say you're in the market to buy a General Electric jet engine to keep as a spare at your Chicago aircraft maintenance facility. Where do you turn to lease the engine? Well, General Electric has an entire group General Electric Engine Leasing (GEEL) devoted to nothing more than making it as easy as possible for the company's customers to lease its products.
Many manufacturers especially manufacturers of big-ticket items include captive leasing operations (called "captive" because they most often exclusively finance products produced by their corporate parents) within their organizations as a way to increase product sales and make a little extra money while they're at it. Ford Motor Credit, Cat Financial |
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Advanced Tips on Raising Capital, Part 1 |
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Okay. You've taken all the traditional routes to obtaining the capital you need to run your business you've applied for loans, you've maxed out your credit cards, your friends and family hide when they see you coming and you still need capital. What should you do next? Give up and start researching the differences between Chapter 7 and Chapter 11 bankruptcy?
No not even close. The fight to obtain capital for your business has just begun. If you've reached the end of the road with your conventional arsenal of financing tools, here are the best unconventional tools to get you the money that you need when you need it. Of course, just because these ways of raising money are a bit off the beaten track doesn't mean that you can't put them to work for you before you exhaust your more conventional approaches to raising capital in fact, you may just want to put them to work for you right now.
Advance Payment
When it comes to financing your business, nothing is sweeter than getting your customers to pay you before you deliver the goods or services that they have agreed to purchase from you. If you're particularly |
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Angel Investors and Valuing |
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Valuationputting a value on a business is a difficult task even for professionals. The task is that much more daunting for nonprofessional investors, a subset of the investment universe that includes most angels. The more sophisticated angels have wrestled with the issue and come up with a solution: next-round pricing. This methodology may be best illuminated in question-and-answer format.
Q: How do you value a start-up in the angel round when there are no revenues, customers, nor complete management teams... just a concept and some intellectual property?
A: Increasingly, the answer is that you don't. You value the company for the purposes of allocating percentage interests for a given amount of money on the basis of the next round, the so-called Series A round.
Q: Why postpone the valuation?
A: First, it's very hard for angels, particularly angels who are not routinely involved in the venture capital business, to come to an intelligent estimate of valuation when so many factors are yet to be known or realized. Secondly, angels are often friends and family (the angel round is sometimes called the friends-and-family round), and there's a natural reluctance to drive a hard bargain with a relative, a former college roommate, or the best |
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Advanced Tips on Raising Capital, Part 3 |
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Investment Partnerships
It seems like lawyers, accountants, consultants, and other professionals always are on the lookout for a good investment. If your business is doing well, and the opportunities for growth look good, don't be surprised when professionals that you've hired to work with your firm approach you to see whether they can invest in your firm. When the professionals who work for you invest in your firm, everyone benefits: You get the cash that you need and, when your company performs well, your investors can get a nice return on their investment.
So the next time your professionals come looking in your neighborhood, be ready with a presentation about your business that you can pitch to them on a moment's notice.
Offshore
Capital markets are truly global nowadays. If your company is large enough and has a high enough profile, limiting your search for capital to local sources, or even to sources in the United States, isn't necessary. Just as American investors always are on the lookout for a good investment, investors in other countries also are on the lookout for lucrative places to park their money. This isn't an easy path, and it's definitely not fast, but it may be the option |
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Debt or Equity, Part 2 |
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If your company is fast-growing, innovative, and produces terrific products or services, you may find that people aren't interested in just purchasing what you sell, they're also interested in purchasing a piece of your business. Although the make-money-fast days of the recent explosion (and subsequent implosion) of dot-com firms seem to be behind us taking with them a boom in IPOs plenty of investors still are looking for good opportunities to put their money to work.
Here are some of the more common ways that you can raise equity capital from investors:
Angel investors
Family and friends
Founder's capital
Initial public offerings
Strategic investors
Strategic partners
Venture capital
Keep in mind, however, that equity financing is considerably different than debt financing, and in many ways it can be far more intrusive to your business. Here are some of the things you need to consider before committing to an equity financing plan:
Unlike debt that can be paid off (for example, by getting a new bank), it is very hard to reverse (that is, pay off) an equity investment. The investor will want a lot more money than he put in because of the risk he assumed. So you should generally look at raising equity as an irreversible event. |
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