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Venture capital may be needed by your business for
many reasons. Expansion, tying you over when unforseen
delays occur, slow paying customers, new high volume
customers.
Capital is not hard to get. Money is available for
any viable business with a good business
plan. But you must prove that the business
is viable and the plan must be sound. Too many
plans are not worth the paper they are written on.
Most experienced lenders can tell quickly if the plan
is realistic or inflated. Many rely on consultants
to do 'due diligence' or evaluate or write the business
plan.
The cost of capital varies. Each one requires careful
evaluation of ALL the options. Don't go with the first
one offer you get.
(Today, for Government supported small loans, you
should pay less than prime + 2% for a small-business
loan).
Some institutions charge interest at a reasonable
rate, but require full collateral or a much higher
collateral than the loan. The latter is open to abuse
in case of missing payments.
Some private lenders will match your own investment
and will charge you a higher interest rate.
Others will require shares for 40-60% of the business
and a seat on the board of directors.
The latter is the most economical and may give you
additional business advice, a major benefit.
Here are some of the resources in the Toronto area:
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