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.
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May 2, 2014
You can get easier access with what are called "alternative lenders." I happen to do some blogging for this one: http://www.reliantfunding.com You don't have to use them, but you'll get a feel for what they are. This class of lender is backed by a hedge fund or private equity of some kind, so they have fewer regulations to follow. You can get a lot funding and fast, and with Reliant, you only need to do $5000 per month in revenues for a year to qualify. You can get access in just a few business days.
The caveat to all of this? Be careful for the interest rate. But, this lender says they'll work out a reasonable payment solution that works for your business. You don't have to use that lender, but it's a starting point.
May 2, 2014
If one has either a history of company profitability and increasing cash flow OR a strong personal financial statement, getting capital is not a big problem.
May 2, 2014
Capital one has very good different programs for small businesses. Check it out here:
http://www.capitalone.com/business-credit-cards/
May 2, 2014
it depends where you are located and how much. Can you provide more details?
May 2, 2014
Hello CJ,
I am not sure what industry you are in however in the retail sector you can get the capital you need for a project through a merchant services cash advance. Depending on your processing volume you could qualify for up to $100,000 to use as a cash injection to the business. You then would pay the advance off with a small agreed to percent of the credit card sales you process. If this sounds like a viable option feel free to reach out to me. I wrote a blog post on the subject that can be viewed at: http://www.totalmerchantservices.pro/MerchantServices/MyBlog/CreditCardMerchantServicesCashAdvance.aspx
May 2, 2014
there are options available if you are in business for longer then 2 years have over 700 credit score. you can use the equity in your business or patents or contracts and of course Purchase orders and receivables. i fix problems and this is one of the biggest for businesses
May 6, 2014
Dave, I am not sure I understand when you say you should never have to use your own personal credit for money for your business. Every bank loan I have seen for businesses under $20 million in revenue has a personal guarantee. All the trade credit I see extended to small business comes with a personal guarantee. CJ is running his business on credit cards so equity financing is not likely given his size. It would seem a bank credit line with a personal guarantee would afford him the lowest cost of money other than a home equity loan. Banks since the end of 2012 are back in the business of giving credit lines to business with 3+ years, predictable cash flow and good credit history.
So how do we avoid the personal guarantee when getting the next 30-50,000 for the business?
May 2, 2014
CJ - There are so many possibilities, and each has pros and cons. And especially seeing that you are in the Internet area, where traditional sources often don't understand. Debt vs equity is a big issue too, and then most will probably look to your personal side also. If you want I could talk to you about this; I've been through it all, much as CFO of a similar www co. Good luck ! - Joe Kennedy, www dot swat-cfo dot com
May 2, 2014
The good interest rate is always going to be problematic, which is why the first option should always be going to the credit union or bank where your business has accounts. You can't beat a personal relationship, and if there is equity in your business or a consistent cash flow, it should not be unreasonable to expect a decent line of credit. I've worked with a number of businesses that, for whatever reason (usually some over-extension or they are at the mercy of the real estate market) cannot get the line of credit they need through their bank, and in these instances the best bet has been leveraging the power of their credit card sales to get a merchant loan through their processing company (technically, through a "partner" of the processing company). This is not exactly the lowest interest rate deal, but it is a very manageable one because the payments are tied to a percentage of the processing volume and deducted accordingly. It's often a technique that sales agents use to get a business to switch to their processing service, but it is not one I generally employ unless a merchant has specifically asked about it. Of course, this sort of option is only going to be available to businesses that a) accept credit cards for their goods or services and b) have at least three to six months of proven processing volume to base the loan on (as well as verifiable cash reserves in the bank in many instances).
May 2, 2014
Different types of financing match different industries. For example, ag loans for agriculture and equipment loans for construction. What industry are you in? Also, it sounds like you just need working capital, or are you in a growth phase? Warren makes a good point. If you are in a growth phase it may be best to find a partner, or an investor.
May 2, 2014
Peer to peer funding (crowd funding).
May 3, 2014
That's very interesting Dave - thanks for the info. I have been thinking of using one of these for a project I have planned, but it would have been for a for-profit entity. I know a couple of people that have used KickStarter to fund independent albums and I'm sure they didn't read the fine print regarding the taxes. I will certainly do more research on this for my projects and will forward this info to my musician friends.
May 4, 2014
Dave, do you know if this holds true if the company offers a product in exchange for the money? A lot of crowd funding sites suggest the business offer an item in exchange for the funds either as a pre-launch discount on the product or other items of a varying value dependent on the offering. If a product or service exchanges, then is it considered a gift?
May 5, 2014
We took a look at your company website. We believe a business line of credit, cash flow loan or purchase order financing might work for your company. However it would depends on the your company credit, operating history and financial. Hope this help.
May 5, 2014
Equity financing -- from Friends & Family; angle funds; etc. -- is always nice if you can get it. Another way, depending in the state in which you operate, is to contact the department responsible for economic development. (For instance, in Connecticut, this is the DECD -- Department of Economic Cooperation and Development.) Most states have something like this, and generally the terms are reasonable. More specifically, you can generally get loans with very favorable interest rates. The trade-off tends to be that you are dealing with a bureaucratic organization, and therefore the reporting requirements -- the proverbial hoops you have to jump through -- are much greater than other avenues.
May 7, 2014
A client came to my office today with the same question! Although the bank will still look at financials, credit, orders/contracts, etc., try your local community bank(s) as community banks tend be to more receptive to your type of situation; you may be required to open a business account with the bank.
May 7, 2014
The alternate funding source many small companies here in Albuquerque have turned to are a handful of mostly privately funded non-profit organizations dedicated to providing micro lending, training, and guidance. [Here's a link to one of them: http://www.accionnm.org] Perhaps such organizations exist in your community as well. If so, I'd look into them.
May 8, 2014
Hi CJ, check out accelerator groups. You enter contests sometimes for free, sometimes for $100. Many times you can 10,000- 100,000 in financing, tht you do not have to pay back. You can also receive in kind business services. Many corps, colleges offer them. Best wishes. Deb
May 8, 2014
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.
May 8, 2014
There is probably one in your area.
http://successfulbusinessnews.com/accounting-banking-credit/accounting-banking-credit/accounting-banking-credit/unconventional-small-business-funding-opportunity-flourishing
May 8, 2014
CJ, if you have assets, collateral, A/R, purchase orders and a history of a solid revenue stream, I might be able to help.
May 8, 2014
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.
Dennis Henry
Action Items, LLC
visit seattle dash cfo dash services dot com for more info
Dan is right. lending is out there in different forms. In my side of the world, food service. Funding is difficult even for those with a proven track record. Getting money inst hard, t is getting the amount you need that seems impossible. You can get funding from your credit card processor of futures sales. They look at your sales for a certain amount of months and calculate an amount based on that. Then your payments are pulled out of your daily credit card sales. Makes sure when you do projections or allot for this money coming out each day when you are budgeting. The interest isn't bad if you use the right company.
When the SBA is involved I cringe, bring a government run office, I dont feel it is worth the time to deal with them. At least in my area. Best of Success. Gil