Although not all private investors use the banking system to obtain their funds to invest, many do use it.

Take the situation where the private investor has a corporation with a business line of credit.  The corporation exercises the business line to get money to invest.  Then the private investor uses those funds to make private investments.

In that case the private investor is essentially doing what the banks have been doing.  The private investor is making money on the spread of the interest rate they got on the credit line and the amount they charge to the client seeking private money.

So what happens when those credit lines are diminished or cut out entirely?

The private money dries up just like the money in the banks.  So the private sector is also affected by the banking crisis and the credit crunch.

Although I don’t’ know for certain how the investors in the investor network get their money to make investments.  It’s reasonable to assume that at least some of them are using their corporate holdings to get the cash to invest.  This means that their money supply is also smaller.

So the private sector does follow the banking industry to some extent when the banks fail or refuse to make new loans or lines of credit.

There’s a recent post on The Money Code Blog which talks about how the governments are getting into the banking business and what effect that may have on the future of the whole money system.  The post, “When The Government Gets Into The Banking Business” is worth reading for the insights about what this means for the future of credit and lending.

It may even change the future of private money investors.

Today the world of finance is in turmoil over not enough money for current projects.  Consider the recent article posted on MSNBC, Credit crisis halting commercial construction Investors pull out of $5 billion project to build tallest building in Vegas.

In this article the Clise family in Seattle had to stop their project.

Clise Properties Inc. halted discussions with potential partners in April after it became clear that most investors wouldn’t find reasonable financing to develop the site with the company during a global credit crunch. Interested investors had to put up more than $600 million just to compete for the opportunity.

Again another large project failed in Las Vegas.

Last month, Australian gambling firm Crown Ltd. backed out of a $5 billion project to build Las Vegas’ tallest tower because of financing issues. The company held a 38 percent stake in the joint venture with Texas developer Christopher Milam and private-equity firm York Capital Management and will have to write off about $42 million related to the investment.

Boom Areas Turn Into Bust

In addition, the boom areas of a few years back are turning out to be busts.

Commercial real estate projects in Denver, Phoenix, New York and even Donnelly, Idaho, have run into similar snags, while developers in housing-bust markets like Florida and Southern California have axed smaller projects.

You Are Not Alone

So if you think you’re having a hard time getting the financing you’re looking for you are not alone.  The world of both public and private money is playing it very cautious these days.  They are taking a lot longer to evaluate any project, and they are really looking closely at the business plans and the areas to be developed.

What does this mean for your current projects?

Any project you are proposing for private money funding needs to really be air tight.  Make sure all your i’s are dotted and t’s are crossed.  Cover all the marketing plans with extensive research to show there will be a profit.  Have a white paper ready to explain how you’ll address any negative issues in your plan. Show that the principals in your plan really have the expertise and past experience to pull off the project.  And make sure your projected figures are conservative.

There still is money available for good projects that have the proper back up in documentation.  But the era of the “No Doc Loan” is gone.  Be prepared with full documentation and you still may be able to get the funding you’re seeking.

In terms of sources for funding our JV Funding Investor Network only requires a minimum of an executive summary and business plan to determine whether any investor is interested.  But after that point, you’ll need good documentation when you meet with an investor.

So if you’re still looking for funding, AccessToPrivateMoney can provide the opportunity to meet with an interested investor who may actually fund your project.

When you have a great idea and you’re looking for a Private Money Investor or Private Money Lender, you need to do some work first before presenting it to the investor.  Investors want to see Business Plans and not ideas.  Ideas are a dime a dozen and not worth much more.

Create A Business Plan

If you want to be taken seriously as someone who knows what they’re doing, you have to have a business plan.  You have to put the work in first before approaching any investor.

Think of it this way.  If you were the investor, wouldn’t you want to know exactly how someone wanted to use your money and how you would be paid back.  You’d want to know what the risks are in the investment.  The Private Money Lender is no different.  They need to know as much as possible before they’ll commit to any investment.

Access To Private Money deals with an investor network of multi-million dollar investors.  They will not consider any project without a good executive summary and business plan.  So we cannot accept any project that doesn’t have that spelled out.

We Need The Plan And Not The Idea

So the next time you have an idea of how to make money, (that’s the basic purpose of all businesses) consider developing a complete business plan prior to seeking funding.  Your chances of success will be thousands of times greater.

If you’re new at developing a business plan check out Entrepreneur.com for what needs to be in a business plan.  They give a good guideline as a place to start.  In addition, there are many services that will develop a plan for you for a fee.

So when you send us information about your new business proposal, send a business plan and not an idea.

When you’re looking for funding for your project from a Private Investor or Private Money Lender you have to be able to show the Private Money Investor that you know what you’re doing.

No one is willing to give away millions of dollars to someone who doesn’t have a Good Business Plan.  Just think about it.  If someone came up to you looking for millions of dollars for a great idea, wouldn’t you want to know a whole lot about that idea before turning over your money to that person?

Private Money Lenders Need More Than Good Ideas

A terrific idea is not a business plan.  Just saying you have a way to make a terrific return on the Private Investor’s money isn’t good enough.  The investors in the JV Funding Private Investor Network only need to see a Business Plan and Executive Summary to get interested in your project.  But it has to include enough detail to make it believable.

So what’s in a Business Plan?

Many people seeking funding ask me that on a regular basis.  Some even want me to assist them in preparing their business plan and executive summary.  So for those people who have their idea and have not put together a good business plan in good English, here is a reference of what needs to go into a business plan.

Entrepreneur.com describes a business plan as:

“Simply stated, a business plan conveys your business goals, the strategies you’ll use to meet them, potential problems that may confront your business and ways to solve them, the organizational structure of your business (including titles and responsibilities), and finally, the amount of capital required to finance your venture and keep it going until it breaks even.”

For more detail about what’s included in a business plan see the An Introduction to Business Plans article so that you’re prepared when you seek your Private Money Investor Funding.

Keep in mind that the more money you’re seeking the more detailed the plan needs to be to show the need for that money.  And if you’re seeking funding for a project in the multi-millions of dollars, you can get AccessToPrivateMoney for your funding.

When you’re looking for funding for a project, who do you think of as a “perfect investor?”

Well, when our banking system was in a bind they were looking for investors to help them out.  They needed money in a hurry.  So where did they go?

They went to where the money was outside the United States.  They sought out Sovereign Wealth Funds.  There are many reasons why they would do that.  But I found one interesting comment about these funds in the article by Tapan Munroe in his column Foreign funds rescuing banks which recently appeared in the Contra Costa Times.

In Tapan’s answer to his number 2 question “What are their objectives?” he mentions that they are “perfect investors.”

What Are Perfect Investors?

His criteria for a “Perfect Investor” is:

•  They have huge amounts of money.
•  They are passive investors.
•  There are no strings attached to their money, like a seat on the board or controlling interest in the banks.
•  They are equity investors and not making loans.
•  They are passive owners and not lenders.
•  They lose their money if the banks do not perform.
•  They share in the risks and rewards of the business.

This description seems to fit the private money investors that Access To Private Money deals with.

So, if you’re looking for funding for your project, wouldn’t it make sense to seek out a “perfect investor” and use a private money investor for your funding?

You can get this “perfect investor” advantage by using JV Funding through Access To Private Money.