How Do Money Finders Charge?
Plan on paying reputable money finders a percentage of the money they help you tap, plus some additional fees for services they provide. They don't lump everything into one fee, because some deals are never completed, and the business plan, which might run an additional $3,000 to $10,000, can be used for other purposes. Many finders have minimums or retainers, which are often advances against the ultimate fund-raising fees.
For bank debt, expect to pay 1% to 3% of the amount raised. If you're looking for subordinated debt or equity, fees could be as high as 3% to 5%, or may be on a sliding scale: 5% for the first $1 million, less on the remainder. Why so much? "It takes as much work to raise $250,000 as it does to raise $2.5 million," says Larry Nathan, a Longmeadow, Mass., investment banker. "Maybe more."* * *
PRINT THIS ARTICLE