Alternative Financing You May Not Have Heard Of

Need capital to keep your business going or to implement new growth initiatives? Well, just run down to your local bank. Wait… banks are still not lending to small businesses.

But, banks may not be your only option.

For decades, there have been many financing programs, some backed by banks but most not, that focus on assets based lending or that focus on the strength of the business – not just the business owner (meaning YOUR credit doesn’t have to score in the stratosphere).

Assets based lending is essentially using the financial asset of a business to secure a loan or advance for working capital, general operating expenses or even capital purchases.

This type of financing is more focused on the business asset generated and how easily or safely the asset(s) can be converted into actual cash.

Accounts Receivable Financing: If your business generates customer invoices, there are finance companies out there that will purchase your receivables, advance your company up to 90% of the invoice amount, collect the money from your customers (saving you the time and hassle), and then refund the difference back to your company.

These companies do not lend based on your credit or your company’s balance sheet but focus mostly on your customers’ strength in payment.

Purchase Order Financing: Does your business have customer orders in hand but not the working capital to complete or fulfill those orders? There are financing companies that will provide capital advances based on these unfinished orders; termed Purchase Orders Financing.

These Purchase Order Financing companies will advance your business cash, based on the amount of the purchase order, to complete the job or order. This means having the needed capital to purchase inventory and supplies or even hire additional needed labor.

Whatever the need, purchase order financing is a great way to use or leverage already acquired business to get the capital your company needs to grow and succeed.

Business Cash Advance: Many businesses, just by their nature like service organizations or retail operation, do not generate business financial assets like the ones mentioned above. But, there are still ways that they can acquire needed working capital to grow their business or to meet immediate expense needs. If your business accepts credit cards as payment from your customers, there are financing companies that will advance your business capital against (and get this) your FUTURE credit card receipts.

Benefits include receiving needed working capital today that can be used for any business or personal need, leveraging your businesses ability to generate future income, low repayment requirements based on a small percentage of your future sales – small enough not to harm your business’s future cash flow needs and these financing companies are more interested in your future sales ability (the strength of your business) than your credit history.

The down side is that some of these products, while they try to be very competitive, can be a bit more expensive than traditional loan products. But, keep this in mind, if you have no other alternative and believe in what you and your business can do with the added capital, then the potential benefits far outweigh the expense.

In business, especially for start up businesses or companies that don’t yet comply with traditional loan underwriting, accessing cash for grow or expansion (or even to just meet current obligations) can be a daunting task. But, instead of being intimidated by this process, let that entrepreneurial spirit kick in. Get creative and find ways to make these sources of capital work for you (that is what running a business is all about).

Further, with our current credit crunch (banks just not lending) these types of financing alternatives may be your business’s only option going forward – regardless of its stage or time in business.

Quick Outline of Supply Chain Financing

Supply chain financing combines the cost and accessibility of capital in a supply chain. Some of the different variations in common use are financing options, early payment discounting, inventory management and balancing credit. This is not an innovative idea. In fact, in advanced economies, many corporations employ it in different variations that have existed for decades if not hundreds of years. However, in the last few decades the idea has grown in importance for several reasons, including the steady increase in the costs of labor, energy and raw materials, as well as continually decreasing cost pressures.

In a world where many successful corporations are cutting dependence on physical assets and investing heavily in working capital, clearly businesses must earn the maximum value from their working capital possible. According to a recent study, 73% of corporations intend to use payment terms in their supplier dealings in 2007, making this type of financing a key to creating a successful trade finance strategy for the 21st Century.

The primary players in supply chain financing are the buyer, manufacturer or supplier, technology provider, and the bank or financial institution.

The principal player in this trade finance strategy is the buyer, who builds brands, advertises and often even creates demand in the consumer market for the products and commodities.

Manufacturers and suppliers need supply chain financing above all others, since they incur huge upfront expenses such as increases in labor costs, energy, and raw materials and must wait the longest before receiving payment for the products they produce.

Technology providers make supply chain financing possible through the technology they employ to bring all the players together. In this shrinking planet with instant worldwide communications and disappearing barriers of entry, a chief priority is to enable the visibility, scalability and ever-evolving innovation that businesses need to keep ahead of the competition.

The last cog in this financing wheel are the banks and financial institutions that lend the capital, provide financial services such as insurance and inventory financing, as well as offer receivables management services and payables discounting.

Clearly, supply chain financing is a trade finance strategy that rewards every party in the supply chain by allowing each of the players to focus on the strengths of their business models. Growing in importance with each passing decade, this trade finance tool will continue to evolve and become a critical part of the overall strategy of every successful business.

Why Early-Stage Startup Companies Should Hire a Lawyer

Many startup companies believe that they do not need a lawyer to help them with their business dealings. In the early stages, this may be true. However, as time goes on and your company grows, you will find yourself in situations where it is necessary to hire a business lawyer and begin to understand all the many benefits that come with hiring a lawyer for your legal needs.

The most straightforward approach to avoid any future legal issues is to employ a startup lawyer who is well-versed in your state’s company regulations and best practices. In addition, working with an attorney can help you better understand small company law. So, how can a startup lawyer help you in ensuring that your company’s launch runs smoothly?

They Know What’s Best for You

Lawyers that have experience with startups usually have worked in prestigious law firms, and as general counsel for significant corporations.

Their strategy creates more efficient, responsive, and, ultimately, more successful solutions – relies heavily on this high degree of broad legal and commercial knowledge.

They prioritize learning about a clients’ businesses and interests and obtaining the necessary outcomes as quickly as feasible.

Also, they provide an insider’s viewpoint and an intelligent methodology to produce agile, creative solutions for their clients, based on their many years of expertise as attorneys and experience dealing with corporations.

They Contribute to the Increase in the Value of Your Business

Startup attorneys help represent a wide range of entrepreneurs, operating companies, venture capital firms, and financiers in the education, fashion, finance, health care, internet, social media, technology, real estate, and television sectors.

They specialize in mergers and acquisitions as well as working with companies that have newly entered a market. They also can manage real estate, securities offerings, and SEC compliance, technology transactions, financing, employment, entertainment and media, and commercial contracts, among other things.

Focusing on success must include delivering the highest levels of representation in resolving the legal and business difficulties confronting clients now, tomorrow, and in the future, based on an unwavering dedication to the firm’s fundamental principles of quality, responsiveness, and business-centric service.

Wrapping Up

All in all, introducing a startup business can be overwhelming. You’re already charged with a host of responsibilities in which you’re untrained as a business owner. Legal problems are notoriously difficult to solve, and interpreting “legalese” is sometimes required. Experienced business lawyers know these complexities and can help you navigate them to avoid stumbling blocks.

Although many company owners wait until the last minute to deal with legal issues, they would benefit or profit greatly from hiring an experienced startup lawyer even before they begin. Reputable startup lawyers can give essential legal guidance, assist entrepreneurs in avoiding legal hazards, and improve their prospects of becoming a successful company.