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?

Angel Investors look at deals differently than banks, or most other lenders for that matter. Their focus is to net between 5 and 10 times their initial investment in a period not to exceed 5 years. They do this by carefully plotting their exit strategy to recover their funds within the specific time period they define which can take the form of public offerings of stock, takeover or liquidating the assets of the company. What ever it takes.

Angel Investors have now increased their threshold for their ROI to a minimum of 10 times to as much as 50 times their investment because of the failure rate and the length of time that the investor will be tied into the company. When you consider the bigger picture, the effective return on investment for the Professional Angel Investor is usually around 20% to 30%.

Since the ROI for and Angel Investment is so high but the lower costing financing at the credit union and banks are not available, especially for business start-ups it makes being in business even more difficult. The reason the banks and credit unions are not interested in financing start-ups is because they lack the history and asset backing required by their underwriting guidelines.

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

Reality is it does not matter if you are in Canada or the United States you do have options. Here I will give you a real example of a business that found the best option. There is a company in Alberta Canada that was looking to expand throughout North America with their product. The owner of the company went to the usual channels to get Commercial Financing. After he was turned down by the banks he the spoke to some Angel Investors and received proposals. After considering what was at steak by accepting the proposals he decided to continue looking for options. This is when he and I met over the internet and I presented him with options he had never considered, nor heard of for that matter. Accounts Receivable Factoring and Purchase Order Finance.

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.

In a matter of 7 days after the application was returned to me he was ready to fund and now has access to the much needed cash he needs to grow his business.

In short, if your company has been turned down by the banks and credit unions plus there is no comfort for you in dealing with an Angel Investor due to their terms, be sure to check with a Professional Commercial Finance Broker so they can put together the proper financing for your business.