Joint Venture Financing
Joint venture (JV) project financing is an excellent funding solution for many businesses. This allows companies who are willing to give up some equity to grow without adding debt to their books. Companies with a solid business model and product can use this approach to scale up quite rapidly as they are not burdened with debt or loan repayments, enabling them to focus on creating additional revenue and adding more value than they could with traditional financing. Other businesses seek out more strategic joint venture funding to grow their business. In these partnerships the financing may be of less importance than the relationship itself with the joint venture partner. The equity capital is exchanged for benefits the partner can provide, such as being able to develop relationships with commercial vendors or retailers which otherwise would not be possible, or the use of commercial equipment which allows for an efficient means to scale operational production.
Whether you are seeking to grow your small business or acquire an investment property, it is important to consider that joint venture capital lenders have even more leverage than a traditional debt capital lender. They are more selective as the stakes are different. Rather than evaluating the ability to make a low fixed monthly payment over a period of time, they must evaluate the success of the company over time. The more success your company experiences, the greater the return for the jv capital investor. While that may seem intimidating to some, it is actually a very good thing for the client. You get a much more hands-on lender who not only is concerned about your success, but is focused on the magnitude of your success. Nearly every industry and project type can be funded by JV capital loans. Common venture projects are hotels, shopping centers, office buildings and condos, where both parties share in the risks and rewards of the joint venture project.
When approaching joint venture capital funding for your project, always remember investors are looking for profit potential and are adept at reading between the lines. Simply stating that your project will make a lot of money isn’t good enough. Your key to success in securing investment is presenting a professional business plan that clearly outlines how you will achieve your goal. Another important factor is the management team; an investor needs to feel he is working with a team that is experienced and will get the job done, think of it as a job interview for your company.
Our team is happy to listen to your financing needs and help determine if joint venture financing would be the best way to provide working capital for your project. We will use our experience to create solutions that meet your funding requirements and create long-term success.
