Where do you turn if you need Money for your Business?
It is not easy to find working capital to grow your business today. And if you are doing all the right things growth consumes even more of your precious cash. Increased sales mean increased payroll, materials, and overheads. Where does an undercapitalized entrepreneur turn?
Let’s discuss what is available for you and your business today. Depending on the length of time you have been in business, your type of business, the amount of money you need and your personal credit situation; we will discuss your choices.
A Start-Up Business
If you have visited the big name banks, it has probably been a humbling experience. They are not in the business to lend money to start-ups unless it is a loan against your personal assets. However, being a start-up is not a bad thing to all types of lenders. Invoice Factoring Companies like start-ups. If you can generate an invoice to a creditworthy client, then you can get monies advanced to you against that invoice. The SBA also has programs through it Start-Up America Initiative.
If you are at least 6 months in business and take credit cards, Merchant Cash Advance Services are available to your business. Looking at your average monthly credit card sales, a merchant cash companies advances you monies up-front and then is repaid thought your future credit card sales.
In Business less than 2 years and Losing Money
See the above options in the Start-Up section. All are still on the table for you except the SBA. If you are negative cash flow, there is a limitation of the choices from the SBA. In addition is the new option of Purchase Order Financing or PO Funding. If you have successfully completed a few transactions and you have decent gross margins (25%+), then this type of funding is available. Similar to Invoice Factoring, Purchase Order Financing will buy the goods for you so you can complete an order.
All of the above plus shaky Personal Credit
The good news here is that Invoice Factoring, Purchase Order Financing, and Merchant Cash Advance are all available for your situation. These three tools respectively all look at your ability to generate sales on credit, orders and credit card sales from creditworthy clients. Remember to watch your gross profit margins closely as a too low profit will quickly burn through your cash even with the correct funding tools.