When it comes to ideas for business financing, sometimes you need to get creative and think beyond the bank loan. We outline four possible options below.
Accounts receivable is only money on paper until your customers remit payment for outstanding invoices. Why not put those unpaid invoices to work for your company by selling them to a third-party factor? That company purchases and collects on the invoices, providing you with immediate business financing. You pay interest on the amount received and potentially a few other fees as well.
Use Funds from Your 401(k) without Penalty
If you contributed to a 401(k) with a previous employer, that money remains yours until retirement. It could also provide an excellent source of funding to start your own business. Due to changes in the tax code, you can access those funds without penalty as long as you follow the proper steps. Just be sure to consider this option carefully as it will drain funds from your retirement savings account.
Make Yourself Known to Angel Investors
Obtaining business financing via an angel investor is a popular start-up strategy. Before you meet with the potential investor, practice your pitch to ensure that it’s succinct, to the point, and highlights the experience of your leadership team. New companies can make investors nervous, so take the time to play up previous business experience as much as possible.
Apply for a Business Loan Backed by the Small Business Administration (SBA)
With each new financial crisis, it seems that bankers only get stricter with loan criteria and that more start-up business owners fail to secure the funding they need. One way you can increase your chances of approval is to work with a bank that offers SBA-backed loans. This gives the bank assurance that the SBA will repay some or all of the loan on your behalf if you can no longer make the payments.
We are happy to help you explore all available business funding options in person. Please contact Sudden Rivers Capital Corp today to request an appointment.