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posted: 8/20/2012 6:00 AM

Financing options include crowdfunding, new angel group

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There are some decidedly nontraditional but potentially fruitful solutions to the perpetual small business financing issue.

For example, Rosette Marturana is hoping that crowdfunding, an Internet-based option that connects small donors with businesses, organizations and even individuals seeking money, will be the answer to her long search for startup financing for her Mount Prospect business.

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After four years of trying, but failing, to find financing for her Get Home Smart Card, a taxi-focused card that gives users, especially those who might have overindulged, a prepaid ride home option, Marturana has listed the Get Home Smart Card on Indiegogo Inc.

Indiegogo is the San Francisco-based platform that earlier this year aggregated funds donated to the bus-monitor grandmother in Greece, NY, bullied by middle school riders. You can follow Marturana's progress, and learn something about the process, at www.indiegogo.com/gethomesmartcard.

Chicago-based LendSquare LLC, operates in a similar crowdfunding fashion -- with the important difference that people willing to help finance a local company actually are individual lenders, not donors.

"We created an online platform, a payment system and legal framework that allows interested parties to lend money to local businesses," explains LendSquare President and Founder Sebastian Villarreal.

A business seeking cash -- initial LendSquare loan requests have ranged between $3,000 and $50,000 -- posts its particulars on the LendSquare site, www.lendsquare.com. Borrowers, who in the LendSquare concept likely are individuals in the community, post the amount they are willing to lend and the interest rate they want to receive.

"It's a loan," says Villarreal. "People get something back."

Federal legislation could help the crowdfunding process. Signed into law earlier this year, the Jumpstart Our Business Startups, or JOBS, Act, would allow small businesses to crowdfund by selling up to $1 million in equity. The Securities and Exchange Commission is writing guidelines for the process.

• A long-planned angel financing group is apparently ready to hear its first pitch next month. The Collar County Angels, informally shepherded through a years-long birth by David Gay, manager of the Illinois Small Business Development Center at College of DuPage, Lisle, will operate as an independent angel investing group unaffiliated with either COD or the SBDC.

Preferred investment candidates are high growth, highly scalable businesses that have exhausted their own resources, Gay says.

"What really interests me," says Christian Hmura, CEO of Gold Coast Asset Management LLC, Lemont, and an early member of the Collar County group, "is the opportunity to do some mentoring. We're not investing in a company listed on the stock exchange where there is no communication with management. We'll actually get to know who the people are."

The fact that businesses are expected to "be in our backyard" is especially intriguing to Hmura.

The Collar County group will be DuPage centric to begin, says Gay, but the plan is that interested investors from throughout the suburbs will join. Angels will make individual rather than group investment decisions.

• Jim Kendall welcomes comments at JKendall@121MarketingResources.com. 2012 121 Marketing Resources Inc.

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