Today getting a small business loan is a daunting task at best ” regardless if you are in the United States or Canada. Many businesses look to Angel Investors for the much needed cash injections the banks had turned them away for. But is this the Best Alternative?

Banks will look at you company from one perspective while Angel Investors will look at it from another. They will want a minimum of 5 to 10 times their investment back when they pull out. The time frame that they want to be involved with your company varies between 1 to 5 years. They calculate the deal based on liquidation factors such as stock offerings, liquidation of assets or hostile takeover.

Since the market over the last few years has been such a challenge, Angel Investors have now increased their requirements fro 10 to 50 times their initial investment because the time frame they need to have funds tied up for has increased to up to 10 years.

Due to this excessive ROI requirement, Angel Funding is very expensive, but the lesser expensive funds at the bank are not available. Banks typically do not like new start-ups or companies with out strong financials.

So you are declined at the bank and you can not afford Angel Investors now what?

It is irrelevant if you are in Canada or the United States, the story is the same but there are options. This is a real life deal that I just completed recently. It is a Distribution company in Alberta Canada that had a unique product that it wanted to market throughout North America. The owner went to the usual banking institutions and was denied the loan. He then spoke to a few Angel Investors who gave him proposals which he did ponder over but shortly after continued to search for options. When I spoke with him I suggested a combination Accounts Receivable Factoring and Purchase Order Finance facility.

The company had just shipped out one order which took nearly 70% of his inventory and he had another order going out the following week which would wipe out the rest. They he was planning to wait until he received payment from his customer before he could order more product from his suppliers. Next trouble was the he had other orders waiting to be filled.

Within a week of his initial application the company was funded and he now had the operational funds needed to operate his business smoothly.

The moral of the story is quite simply, even if you are turned down by your bank, and you are not interested in giving your company away, there may be options to be had. Do your homework and seek alternative Commercial Finance options.

Wade Henderson - recognized Professional - 15 yrs in the Business Finance Field - strong reputation for getting the deal done. IMMFinancial.com venture capital firm venture capital investment