See a new opportunity for your business? Need to make payroll? Want to pay down your personal debt? Need new equipment? Need to build your inventory? Need to complete a new order? Need to hire?
So, you run down to the bank only to hear the same old things:
You’re not profitable enough!
You haven’t been in business long enough!
Your credit is below our minimum!
You don’t have enough collateral!
What ever the reason, you still cannot get the money you need.
Well, there are other ways – regardless of your credit, time in business, profits, or collateral – by leveraging your past sales.
Asset Based Lending: Business can still get financing their accounts receivables. This is where non-bank, finance companies will advance funds up to 90% for accounts receivables (the reminder is paid when the A/R is collected) less a small discount fee usually between 1% to 5%.
Why wait 30 days or more to get paid – your suppliers and employees won’t wait 30 days. Factor your receivable and get your cash now.
OR, got a big job to complete but no money to do so, factor your purchase orders – get up to 100% for your purchase orders so that you can purchase inventory, hire additional labor, or whatever it takes to complete the job. Thus, you satisfy your customer (which is always a good thing) and realize your margins (profits).
The best things about Asset Based Financing are that they are not based on your credit but the credit of your customers. If their credit is subpar, you should not be doing business with them in the first place. They are based on assets that you already have so you don’t have to worry about earning more business to satisfy a fixed monthly payment, and you only have to repay these facilities when you get paid.
Further, in some instances, you can receive a line of credit facility based on your receivables. These do require a bit of underwriting, fair to good credit on your part, and a term commitment – usually around 12 months. But, these lines of credit are still much easier to get than traditional bank credit. Why listen to ‘no’ when you can hear ‘YES.’
Business Cash Advances: You have worked hard and built your business. You have gotten the customers to buy. But, you still need some cash for growth. If you take credit cards as a form of payment, think about a business cash advance. These advances are based on your Future credit card sales. They do not require regular monthly payments as bank loans do and are paid back from your future credit card sales. Like asset based funding, advances can be used for any purpose – business or personal, and are available to start-up businesses (in operation under one year) as well.
Don’t take credit cards or don’t have purchase orders or accounts receivables, there are other sources. These sources typically do require some minimum level of credit – but, usually no where as high as banks and other traditional finance companies. But, these do not usually require collateral, time in business, or profits.
Cost: The concern always comes up that these types of advances and loans are far too expensive when compared to bank interest rates. These types of non-bank facilities do not charge up-front fees, maintained fees, reporting fees, or require you to take time away from growing your business to provide financials, satisfy covenants, or explain why you should continue to get their bank debt. Moreover, want is the cost to your business if you don’t get the funds to complete projects, pay suppliers, meet payroll, buy inventory, or grow your business?
You have built the business, so why are you suffering. Get the money you need NOW!
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