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Solutions For Startups That Can’t Get a Loan or Equity Financing

Do you own a startup that can’t get a loan or raise equity financing?  If so, are you open to New Business Trades?  If you haven’t heard about this novel approach for accomplishing business goals, you should give it a closer look.  More and more entrepreneurs are using New Business Trades to fulfil their business goals after they’ve been turned down for getting a loan or equity financing.

New Business Trades have become increasingly popular since the banking crisis of 2008.  Since that time raising business capital to start or expand small to medium sized businesses has been very difficult.  In January, 2013, Ami Kassar reported in the New York Times that “If you’re trying to start a business today, you can almost forget about going to a bank for a startup business loan. This situation hasn’t changed much in the past year, and we don’t see it changing any time soon, with a few exceptions. If you are opening a franchise outlet that is on the approved SBA. list or if you have solid personal collateral outside of your new business, you’ve got a shot at getting an SBA loan.”  I don’t know about you, but I find this trend extremely troubling. Especially when you consider the data from the SBA that reports that 55% of all jobs in this country and 66% of all net new jobs since the 1970’s have been provided by small businesses.  I find this very disturbing when you consider the attrition rate of small businesses.  David Wallace recently reported in Small Business Trends that 50 percent of small businesses fail within the first year of their existence, and that ninety-five percent of small businesses close their doors before they hit their fifth year of operation.  So here we have small businesses failing at a rate of over 50% per year and at the same time we can’t get financing for entrepreneurs to start new businesses to replace them.  If this trend continues, this country is in BIG TROUBLE!

Now if you are a real estate broker, I would really be worried about these financing trends.  The small business sector in America occupies 30-50% of all commercial space in this country.  If we have a failure rate of 50% and few of these small businesses are replaced with new ones, there is going to be massive excessive inventory in commercial real estate in the coming years!

These are scary trends that could eventually lead to a worldwide depression.  If we allow this to happen to small businesses, it will not be long before we are living in a world filled with shuttered retail stores and office building.  Millions of people will be unemployed.  Repo businesses and law firms specializing in bankruptcy will  be the growth industries for the next decade.

Like the Titanic, we’ve hit the iceberg and water is quickly flowing in.  Those on the upper deck haven’t yet noticed the havoc that is going on down below.  They see and hear warning signs but dismiss them because like the Captain on the Titanic, our government officials, the Fed, and mainline media all claim that our economic ship has safety features that would never let us sink.  They claim we are on the road to recovery.  All we have to do is create more money and everything will be OK.

Some of us, however, are closer to the breach in our nation’s economic ship.  Landlords are watching their savings rapidly deplete because they are forced to pay the mortgage, the taxes, insurance and maintenance on properties that have been sitting vacant for months or years.  Owners of equipment rental companies look out at a full lot of tractors, trailers, trucks and tools, with no customers in sight.  Skilled workers now call themselves consultants because they can’t find a steady job.  Business owners that would like to retire and sell their business can’t find a buyer that can qualify for a loan.  Entrepreneurs can’t start a business because they are unable to get a startup business loan or raise equity financing.  For us, it is obvious that we are on a sinking ship!

Passengers on a sinking ship will initially head for the traditional sources of safety such as life-jackets and lifeboats.  In the business world, our first impulse is to go to the bank, apply for an SBA loan or try to raise capital from an Angel investor.  Unfortunately, like the Titanic, there aren’t enough lifeboats around and the only ones allowed on board are the first class passengers.  In our current times, you need to be a too-big to fail bank, AIG or General Motors to get a bailout.

When you are on a sinking ship and there aren’t any life-jackets or lifeboats to be found, it is time to find anything that floats.  The earlier you explore alternatives to business funding, the better your chances of keeping your business afloat.  Always keep in mind that it’s a race against time.  Your resources are limited and your options are rapidly decreasing.

One non-traditional solution you should strongly consider are New Business Trades.  With this option you can either eliminate or reduce the capital requirements to conduct business transactions.  New Business Trades are a way to team up with other entrepreneurs that hold the missing puzzle pieces that are preventing you from realizing your business goals.  When you think about it, fellow entrepreneurs are probably your most ideal source of support.  If they have been at all successful, their success was most likely a result of their thinking outside-the box and finding novel solutions.  They’ve also had to take risks that most people would shy away from.  Banks on the other hand, are very risk aversive, especially after the subprime lending debacle.  Now banks won’t even consider lending you money unless you have collateral to back up the loan.

New Business Trades are conducted on the website, NewBusinessTrade.com.  On this listing site, the person or company that is originating a New Business Trade proposes both sides of the deal that they would like to transact.  One side of the trade includes what they are searching for. Narratives, pictures or movies are used to pitch a New Business Trade to potential prospects.

The other side of the proposed trade is also spelled out on the listing page on NewBusinessTrade.com.  This part tells prospective traders what types of deals they are willing to entertain.  For example, a percentage of gross earnings or royalties could be suggested.  Equity could be offered.  An active partnership position could also be tendered.  Another option is to immediately open it up for negotiation by indicating to prospective traders to “Name Your Terms.” The ingredients of a New Business Trade are only limited by the imagination of all the parties involved.

Prospective Traders can use anonymously-relayed email to initially contact people or companies that have created listings on NewBusinessTrade.com.  Once contact is made, negotiations ensue.  Counter-proposals can be submitted.  Physical or virtual meetings can be scheduled.  In the end, both parties either agree to a trade or decline involvement.

There is often an unequal value between what is being sought and what is being traded in a New Business Trade.  In addition, one of the parties might only be interested in a partial trade.  In these cases, the other party will be required to put up some cash to go forward with the transaction.

NewBusinessTrade.com strongly recommends that a licensed real estate or business broker review any trades that are brought together on this site.  Getting the contract done right is critical in order to prevent misunderstandings and to provide remedies if the deal goes sour.  Background and credit checks should also be considered.

In summary, if your business plan is stuck in neutral because you can’t get a loan or raise equity financing, you need to ask yourself: Are you open to New Business Trades?  New Business Trades will help you reach out and connect with other entrepreneurs that can help you accomplish your next business milestone.  Outside-the-box-solutions and work-arounds are the stock and trade of being an entrepreneur.  So when you can’t raise outside capital, visit NewBusinessTrade.com to make your business dreams come true.

NewBusinessTrade.com strongly recommends that a licensed real estate or business broker review any trades that are brought together on this site. Getting the contract done right is critical in order to prevent misunderstandings and to provide remedies if the deal goes sour. Background and credit checks should also be considered.

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