Small Business Loans | Find Help Getting Loans Through Angel Investors

Sept. 22, 2010 - PRLog -- Angel investors are typically entrepreneurs or private individuals of high net worth who seek investment opportunities in small businesses.  They typically look for higher returns on investments than would be offered by more traditional investment vehicles.  Often they are seeking an active role as a board member or as a consultant.  The Small Business Administration estimates that there are at least 250,000 angels active in the country, funding about 30,000 small companies a year.  

This type of investment can be described as “bridge financing”.  A small business or sole proprietorship that requires capital beyond the personal equity investment of the owner/owners, but is not large enough or established enough to attract venture capital investment or institutional investors, may seek angel investors as the first step towards formal funding.

According to the Center for Venture Research at the University of New Hampshire (CVR/UNH), which does research on angel investments, this type of informal investment appears to be the largest source of external equity capital for small businesses. The "average" private investor is 47 years old with an annual income of $90,000, a net worth of $750,000, is college educated, has been self employed and invests $37,000 per venture.

The CVR/UNH study further indicates that 9 out of 10 angel buyers invest in small, mostly start-up firms with fewer than 20 employees, with the same ratio providing personal loans or loan guarantees to the firms in which they invest.  On average, this increases available capital to small businesses by 57%.   Interestingly, investors included in the study would have invested almost 35% more than they did if acceptable opportunities had been available.  The angel investors cite insufficient growth potential, overpriced equity, lack of sufficient talent of the management, or lack of information about the entrepreneur or key personnel as the most common reasons they reject a small business investment opportunity.

There are pros and cons to seeking angel investors. On the negative side, in exchange for their investment, the angel may potentially try to participate in the day-to-day operation and management of the small business to a greater degree than is desired or productive to the growth of the company.  Consequently, the key to maximizing the benefit of an angel relationship is to frame a clear structure outlining the extent or limit of their involvement in the small business.

On the positive side, the due diligence process is usually less rigorous and takes less time, so the small business may be able to fund growth or capital expenditures more quickly.  Even in those instances in which a small business may be considered for investment by a venture capital fund, the expected rate of return would in all probability be higher and on a more aggressive timetable than for an angel.  

For help finding Angel Investors, try registering with ibank.com.

http://www.ibank.com/angel-capital-investors/

They make it easy to connect many Angel Capital Investor--or other type of investor--that matches your business's unique needs.For more info go to http://www.ibank.com/

SBALoans-123.com can also help find Micro Loans from this type of investor here: http://www.sbaloans-123.com/sba-microloan

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Learn About SBA Loans and how to get SBA funding and How to get SBA financing for your small business.