Mo' Money, No Problem
Question: I've already personally signed on our company's credit line and given the bank dibs on my house, stocks and other assets. Does this mean I can't borrow more money to grow my business?
Answer: Not at all! There are plenty of ways to boost your borrowing power without breaching the covenants on your company's bank loan. First, go back to your banker and explain that you underestimated your company's growth potential. Ask the bank to increase the size of your credit line--preferably with a solid business plan in hand. If your banker won't budge, approach another bank and ask if it would be willing to refinance your existing credit line and replace it with a line for a higher amount. You can also borrow against your IRA, 401(k) or other qualified retirement plan. Credit cards--though they often carry high interest rates--are another option. Or you can raise money by selling company equity. "It's not easy to give up a piece of your company, but it's almost always required when it comes to raising capital," says management consultant Tim Sciarrillo. "An investor will feel more confident since you've already obtained a bank loan."Rosalind Resnick is the founder and CEO of Axxess Business Consulting, a New York City consulting firm that advises startups and small businesses. She can be reached by e-mail at firstname.lastname@example.org or through her website, abcbizhelp.com.