Finding funding when credit dries up

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(FORTUNE Small Business) -- Dear FSB: In today's market, how does someone get funding to purchase a $2.6 million project? Banks and lenders are so restrictive that it is virtually impossible to get that accomplished. Is there any way to get business-to-business loans done with high loan-to-value ratios? Thank you.

- Mike, Big Pine Key, Fla.

Dear Mike: Because $2.6 million is at the lower end of commercial-lending activity, Lois Scott, president of Chicago financial consultancy Scott Balice Strategies, suggests you look at alternative financing options.

A good place to start would be local sources of funding, such as community banks in your town, or state and local government-run economic development programs. Your local chamber of commerce might also be able to tell you where you can find financing in the area.

Jackie Harder, president of the Key Largo Chamber of Commerce in Key Largo, Fla., suggests the following capital resources:

• Access Florida Finance Corp.
• Florida Development Finance Corp.
• Florida Export Finance Corp.
• Florida First Capital Finance Corp.
• Florida Small Business Development Center

Also, don't forget equity investment.

"Relatively small amounts, such as $2.6 million for a quality project, would be very attractive to equity investors in today's market," Scott says. "These days there's a lot of competition for equity deals, with a lot of bidders seeking higher quality with more consistent returns."

You can find local angel and venture-capital investment groups by typing keywords such as "Florida angel investors" into any search engine. Scott also suggests spreading the word among business associates, such as attorneys, accountants, and other referral sources. But don't forget that will likely mean giving up a share of your business, as the investor will expect either ownership or a hefty percentage of the profits.

As for business-to-business loans such as vendor financing, where the seller allows the buyer to pay in installments over time with interest, Scott believes that it can be a great deal if your seller is willing. So don't be afraid to ask.