The Real Deal on Raising Money for Your Business

By Monique Hayward

According to the September 2009 American Express OPEN Small Business Monitor, 20 percent of business owners report experiencing difficulty accessing capital.

Even if you manage to get it, you discover that entrepreneurs and bankers have different perspectives on funding a business.

The entrepreneur works her plan to achieve profitability, takes huge risks, and sees success on the horizon. The banker, on the other hand, assesses today’s “Cs” – credit, cash flow, and collateral – and funds businesses with the least amount of risk to the bank, i.e., ones with lengthy, profitable track records. Service, retail, and restaurants, which tend to be heavily female and have a reputation for being tough, highly competitive, and prone to failure, tend to be unattractive from the start.

I believe this disconnect explains in large part why the vast majority of us don’t get money from banks. The Aug. 2009 Small Business Success Index notes that only about a third of businesses rely on traditional bank credit lines, one-fifth get bank loans, and about three percent receive SBA loans. And they usually require your personal guarantee should the business not be able to meet these obligations.

You have to be creative in getting the funding you need for your business. A few areas to consider:

What’s Your Skin in the Game?
According to a Nov. 2009 study by the Kauffman Foundation, the most significant source of funding for all businesses is the owners’ personal savings. Therefore, get your personal finances in order – clear debts, pay off bills, save money. There’s wisdom in that cliché, “Don’t quit your day job.” When revenues fall short, your paycheck fills in and gives you a leg up when you’re ready to seek outside financing. The credit lines I secured were approved because of my day job.

Friends and Family Are True “Angels”
With angel investors difficult to find and attract, your friends and family are your best bet. When I started my company, only one person who invested did not know me before I pitched him. The rest were business-minded friends and family who believed in my ability to succeed, understood the long-term return on their investment, and did not lie awake at night worried about their money.

Don’t Be Afraid to Ask for Help
Crisis never strikes at a cash-rich time, and bankers or angels aren’t coming to the rescue. Instead, you will dig deep into your own pockets and lean on your friends and family to stay in business. Have the “short list” of people you can call in a crunch, particularly other women. As self-empowerment expert Iyanla Vanzant says, “If you think back through your life and your deepest, darkest moments, it was another woman, an angel, who was there for you.”

Explore Financing Alternatives
Alternative financiers offer funding options for entrepreneurs where banks and investors are not. “People-to-people” lending sites, like Prosper Marketplace (, where community members bid on loan requests, are popular among business owners. After a simple application process and routine credit check, I posted my first request on Prosper for $10,000 for working capital, and in less than a day, I received enough bids to fund my loan and secured an interest rate comparable to my credit cards.

Negotiate, Negotiate, Negotiate
Finally, learn the art of negotiation with your vendors and creditors if you get into a tight spot. Most people will accept getting paid late over not getting paid at all. Set up payment plans and openly communicate with them about what’s happening when you hit a slow period or get hit with surprise expenses. You will find that most people, especially if they are small business owners, understand exactly what you’re going through.

Monique Hayward is President & CEO of Nouveau Connoisseurs Corporation and the author of Divas Doing Business: What the Guidebooks Don’t Tell You About Being a Woman Entrepreneur. A sought-after speaker and frequent media contributor, Monique also was named a winner in the 2009 Portland Business Journal’ “40 Under 40” and the 2008 Make Mine a Million $ Business awards. For more information about Monique, visit her web site at

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