As the author of The Funding Is Out There! Access the Cash You Need to Impact Your Business (available on Amazon at http://www.amazon.com/The-Funding-Is-Out-There/dp/1614488207/ref=cm_cr_pr_product_top1), I often get asked the question, “If banks won’t fund, who will?”
Potential Business Funding Sources
There are a variety of choices, too many to name here. (One of the primary reasons why I wrote The Funding Is Out There!) Your potential sources of funding depend on the industry your company is in, the age of your company, the structure of your company, and how much money you need. For companies with quality receivables, accounts receivable financing firms provide lines of credit based on the creditworthiness of your customers; factoring is an option for those with A/Rs who do not have high quality customers. Purchase order financing is rarer but available for distributors or retailers that need products manufactured or aggregated.
Perk crowdfunding is an option if your company is rolling out a new consumer product or productized service. If you need funding for marketing, find a marketing partner who you can co-market with who can and will pick up the tab. This occurs when the partner will derive increased market awareness or greatly enhanced sales of their own products and services by also featuring yours. (It is important that you emphasize these benefits to your potential partner!)
Example of Multiple Funding Sources
As an example, I once helped a client that had obtained a federal contract that would triple her revenue over 3 years. To service the contract, we worked with her current bank to put her on a plan to increase her firm’s existing line of credit over time. That bank also restructured its blanket lien on her A/R; therefore, I could obtain an additional line of credit with an A/R financing firm for her. In addition, we reached out to another, much larger client (client #2), in a similar space to partner with. Client #2 was interested because it had been trying to make inroads into the government agency Client #1 had won the contract with.
Client #1 needed to hire more people and strengthen its infrastructure to properly fulfill the contract. Client #2 offered to help in exchange for Client #1 outsourcing some of the contract in year 1 and 2 to it. In addition, Client #2 used its own line of credit to further assist Client #1 in hiring people and building infrastructure. Thus, this is an example of 3 separate funding sources for one business.
One final note: Focus FIRST on WHAT you need the money for, then on HOW MUCH you need. When you do this, the universe of options expands.
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