Has anyone discovered a good small business financing resource not associated with the SBA?
After starting a business, it's pretty easy to finance the first few years with credit cards... but then the interest rates starts to kill you! Crowd Funding does not lend itself well to my industry, so that is not an option. I just need a revolving credit line with a good interest rate.
If your business is profitable, you have a good credit history and you are willing to pledge the equity in your home or other personal assets, you should be be able to get a revolving line of credit from a bank at a reasonable interest rate. There is nothing wrong with using SBA (unless you are not eligible for some reason). There are substantial upfront fees but you should more than offset your credit card rates.
If you do choose to go the SBA route, it might help to go to a bank who is a Preferred Lender, i.e. they can approve the loan with an SBA guaranty without getting direct approval from the SBA.
The one thing not mentioned in these posts is the fact that you need to keep your business credit separate from your personal credit. If you are financing your business with your personal credit, when you need capital most, you will not be able to qualify for new business loans because it is you, not your business establishing the credit for your business. That may not make sense to you right now, but, when it happens it will despite how much money your business may be making. Starting off on the right foot by getting your business credit established is a big deal. Business equity sells a company on an exit over time as long as the business has it's own credit and capital when sold. If it doesn't, the value of the business is not the business, but the owner of the business which doesn't lend value to the business. The CEO or Manager lends value by its leadership, not by its pocket book.
I have a great solution for hard money loans. Up to $100k.
Contact my office and I will forward the info.
What type of business are you in?
I started my first several businesses many years ago (and still utilize this strategy today for clients) by factoring my receivables. There are dozens of merchant banks in this country that will buy quality receivables, advance funds and pay in full on collection of the invoice. Depending on credit typically costs about 1-2 pts over prime. If invoice paid in 60 days you will incur less tha 2% funding costs amortized over 12 months.
Have you considered working for someone else, gaining the experience in your industry as well as the contacts, and saving up your money. That way, you don't have to borrow.
Revolving lines of credit and the underwriting decision to grant one are based on either:
1) personal credit score - loan limits are limited and low... OR
2) the businesses operation trends, assets, future viability and a few other things.
If you are heading towards the upward trend of increasing sales and profits with a history of two years of profits, a bank line of credit should be easy provided there are no other major issues or roadblocks. Otherwise, there are a myriad of other lenders out there that will provide loans. The key question is this: Is the near and mid future looking positive or negative.
Action Items, LLC
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CJ, if you have assets, collateral, A/R, purchase orders and a history of a solid revenue stream, I might be able to help.
There is probably one in your area.
Look and see if you have a county-wide Small Business Development Center (SDBC) available to you. They are paid for by our tax dollars and are a free resource to assist you. Their advisors can help you identify sources of financing and develop a financing proposal.