Most small business owners seeking financing are looking for the money to purchase a product or service. The majority of time the product or service can be found through a company offering credit terms. Trade credit is used by household supply stores, marketing companies, printers, graphic designers, internet marketing companies, gas stations, equipment companies, auto-dealers, shipping companies, office supply companies, furniture companies and many more.
In addition to trade credit as an alternative financing option there is merchant account cash advance programs. Although this type of financing can be expensive it is still a great option for some businesses. This type of financing is for businesses with a merchant account charging more than $10,000 per month on the account. Many merchant cash advance companies will advance up to three months charges on a merchant account with very little personal credit information required to obtain the loan. The loan is then paid back out of future merchant account activity as a percentage of the total amount charged that month.
Another alternative source of financing is A/R Factoring. If a company has accounts receivable with other businesses with decent history and credit scores, a factoring company will come in and buy the receivables for a discount on the future value. The business gets money now and the factoring company waits for the invoices to be paid. When they are paid by the customers of the business, the factoring company gets their share and repayment on the advance.
A company can also use leasing as an option to finance their business. A lot of equipment and even software can be leased. There is extremely beneficial to start-up companies and those looking for large equipment purchases. The company doesn’t have to pay up front for a large ticket item, which than conserves cash for the growth and day to day operations of the company.
Small business owners need to get creative when it comes to building a business and finding the financing they need. Using trade credit and other alternative financing options just may help your business avoid the obstacles and pitfalls so many have fallen into and lost. For creative solutions for your business financing needs go to www.bcscredit.com and get a free ebook on Building Business Credit for Business Owners.
David Gass
