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Creative Funding is Available

Jack Mcdonnell

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I want to thank the many readers who called in regarding my last article “He Sent His Son To College". My articles are devoted to helping small business owners solve problems which will help keep them in business. Many of those problems relate to finding money sources. It is important for business owners to know the alternatives to conventional funding (for which many owners do not qualify) and many ways to create funding, unique to a given situation. It is hard to write about all of the possibilities without having the details on a specific problem. We are gratified that once or twice a week we have been able to help a member to present their story in a way that leads to a loan or other form of funding.

This month, one business owner will be able to get relief by having a large debt transferred from his personal credit to his company's business credit profile. The business was able to show its ability to service the debt. The owner, however, will still have the obligation to pay if the business does not, but it is called a contingent liability, and does not show up on the personal credit report. Why? Because the owner does not personally owe the money, the business does. The business is making the payments and receiving credit for the payments to help further develop the company's business credit rating. As a result of using the contingent liability alternative, the owner will see his personal credit score significantly improved from 590 to 700 or above.

When I am asked if I can help another business owner in the same way, it's just a matter of gathering specific information to determine if this type of alternative is a possibility. In many cases it is. However, one piece of the puzzle is often the same. It is important that your business sales have reached a level of critical mass. In other words, are you able to show six months of gross sales. . . minus expenses that would support payments for a loan? Second, is the loan going to help the growth or expansion of the business? There are hundreds of ways to approach business lending, but the business must be able to show an ability to repay.

There is now formed a group of investors who will consider contributing equity to small business opportunities if bank borrowing is out of reach. My understanding is that this group is spreading all over the nation, and will soon be advertising in local newspapers. I am sorry that I am not allowed to promote their position until certain matters are cleared through whatever agencies they are required to register their offerings.



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