Private financing choices are readily available for personal, investment, and commercial needs. Private financing simply means you are not confronted with a conventional bank. Private financing can be acquired from private parties who are also known as Angel Investors, hard money lenders, private equity investors, investment groups, or venture capitalists.

Angel investors constitute the largest - and the most flexible group - of private financing choices. Angel investors may be relatives, friends, colleagues, or persons as yet unknown to you. If your field of acquaintances does not produce suitable private financing, stretch the word about your project among all of the above, as well as bankers, brokers, business development groups, etc. The right angel investor will for private financing will most likely be someone who has some knowledge of your field. Angel investors may provide a simply loan, repayable with interest and likely points and a prepayment fee. Alternatively, they may want to take an equity position with your enterprise, taking equities in combination with or rather than interest on the private financing they offer you.

Private equity lenders, aka venture capital firms, can be thought of as a group of Angel Investors offering private financing as a group. Venture capital companies sometimes offer incubators: office suites in which their darling companies (for whom they provide private financing) are housed, watched over, and assisted through the early stages of development. To offer private financing groups the profits that their investors are looking for, private equity loan providers always want a piece of the action. In exchange for the private financing they offer, private equity lenders take an equity position in your organization through stock or some other ways and become your financial partner.

Private financing obtained in exchange for stock can be an effective way to get the initial operating capital needed to start a business, but it can be extremely expensive on the far end. While you probably will not be paying interest in the early stages of your business, you could pay dearly should you become a hit.

If you have real estate to collateralize, you may be able to obtain private financing without having to give away an equity position (and a place on your Board, control over your business choices and all that comes with having a financial partner) by working with a hard money lender. Naturally, hard money lenders can offer financing for real estate investment projects, land acquisitions, and construction assignments. But, by collateralizing real estate you already own, you might be able to obtain private financing for purposes entirely unrelated to real estate. When it comes to hard money private financing, the use of funds is not as important as a clear indication of how the loan will be paid back. Obviously, if you are unable to repay the loan, the real estate guaranteed by this kind of private financing will be sold off by the private financing lender, just as conventional banks foreclose on homes when you cannot pay the home loan.

Regardless of the path you select in obtaining private financing, you will discover private financing companies are more flexible in lending criteria than banks, SBA, or similar conventional lending organizations. Check out private financing companies and brokers on the internet to see which will suit your business demands most effectively.

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