Subscribe to Entrepreneur for $5
Subscribe

Cash Crunch

Don't let investors and lenders use that old "it's the economy" line as justification to put the squeeze on your business.

By
This story appears in the February 2002 issue of Entrepreneur. Subscribe »

No question--it's scary out there. The ever-tightening capital market has many cash-hungry souls grabbing the first deal dangled before them, and that's a dangerous plan at a time when investors and finance companies are demanding onerous terms.

Sure, you will have to make concessions and consider terms unheard of in those glory days when VCs, banks and other financing sources bid against one another for a chance to supply funding with favorable terms and few strings attached. But even in a tight market, terms are negotiable, and fending off unreasonable demands now can help stave off disastrous consequences later. So when judging the benefit of potential funding, be on the lookout for the following red flags.

Memorial Day Subscription Sale- Unlock this subscriber exclusive article and more for 20% off today.

Access all Entrepreneur content with no ads, unlock discounts, and get exclusive advice only available to our subscribers. Plus, our magazine delivered straight to your door.

Get a year subscription today for 20% off. Just use code SAVE20 at checkout.

Entrepreneur Editors' Picks