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The economy might be tough, but I believe the entrepreneurial spirit is tougher. Recently the news has paid an inordinate amount of attention to the plight of laid off workers who are desperately searching for new jobs. In previous periods of high unemployment, the banks were still relatively healthy and in a position to lend money, which fueled an increase in the number of small business start ups.

Small business is and always was the back bone of our economy, accounting for over 50% of the US, gross domestic product (gdp). But now with the credit crunch (credit is only hard to get when you need it), it’s driving a stake right into the heart of that entrepreneurial spirit. Or is it?

I recently had the opportunity to interview two experts, Deborah Osgood and Jor Law respectively, in the field of small business start ups and and mergers and acquisitions. Both agreed that times are tough, but for an entrepreneur, this economic downturn could prove to be life changing. While there certainly is a flight to quality by banks and venture capitalists, Jor Law believes angel investors (a private investor who is willing to lend between $25k-$1.5mm) will make all the difference in this recession. Typically angel investors are people who have made a lot of money and are willing to invest and help others realize their goals. Find some here. Another incentive for the angel investor is that 75% of the capital gains earned off of a 5-year investment are now tax free. Big incentive to help lend. The benefit to the business owner is that anyone who is investing is looking long term, meaning a great idea is likely to have resources behind it and the time to develop.

Deborah Osgood is a firm believer in working with family, friends, and using personal lines of credit as a way to get into business but, ultimately, the federal government could provide the means to sustain you out. The Small Business Administration (SBA) was one of the bigger winners of the economic stimulus package. Under the bill they have become well funded and with the tax breaks that were also put in place as a result of this bill, with a little bit of research you may find the start up capital that you need. Start by researching grants, and small business programs here. The SBA offers programs that allow you to have government aid that will hold your hand from start up to, it could happen, Fortune 500 status. But regardless of how far your business venture takes you, now could be the best time to take the plunge. When unemployment rates are soaring, why not consider buying yourself a job?

Bootstrapping

Severance pay

Credit cards

401k- tax free withdrawrls

Investors

Friends & Family

Angel groups

Gatekeepers (people with access to private investors)

Corporations (ones that see a strategic partnership or other value)

Private equity & venture capital

Borrowing

Leasing

Banking- find small banks that have recently launched and are desparate to lend

P2P Lending- try sites like www.prosper.com The one down side is a $25k limit on loans but a

chance to negotiate the rate you pay 

Other

Franchising

Vendor financing

Grants

Jor Law, Esq.
Homeier & Law, P.C.
15233 Ventura Blvd, Suite #605
Sherman Oaks, CA 91403
Phone: (818) 450-1550 x552
Facsimile: (818) 907-7876
jor@homeierlaw.com

Deborah A. Osgood, Cofounder/CKO
Knowledge Institute, Inc.
11 Court Street, Suite 230, Exeter, NH 03833
(603) 658-0340 | Fax (603) 658-0343
Creator and Founding Sponsor of the Global Resource Network
for Small Business at www.BUZGate.org
“Where all users receive value and all add value”

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Tags: angel investors, credit, deborah osgood, debt, entrepreneur, financing, jor law, layoffs, sba, small business, start a business, stimulus package, stimulus plan, unemployment, us job market, venture capital, zack rosenberg

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This entry was posted on Tuesday, March 3rd, 2009 at 10:05 pm and is filed under Personal Finance. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.