Financing Alternatives for Smaller Businesses

Charts and GraphcsFinancing the cash needs of a smaller business, other than from the personal assets of the business owner, can be challenging particularly with little operating history.  As smaller businesses continue to face challenges when it comes to gaining access to capital and taking advantage of opportunities to grow, it’s important that they’re seeking the right type of financing for their particular needs.  There are a number of sources of financing that smaller businesses can explore depending upon their needs and the nature and circumstances of the business.

Below is a short list of alternative funding sources which could be appropriate depending upon the circumstances and needs of the business:

Equity Funding Sources:

  •  Crowdfunding  – on-line sources for equity
  • Angel Investors – start-up or growth funds for businesses with an appealing business model and well thought out business plans
  • Private Equity or Venture Capital- for successful operating businesses ready and willing to go to the next level

Debt Funding Sources:

  • Equipment Financing – useful piece of financing with fixed terms to fund needed equipment
  • Term Loans – helpful for financing growth strategies for already successful businesses
  • Unsecured Credit Lines – most businesses would be well-served with this flexible instrument, useful for periods of unexpected cash flow variations
  • Inventory Financing or Asset Based Loans – excellent financing tool to support working capital needs
  • Purchase Order Financing – helpful to minimize tying up working capital for orders from manufacturing sources
  • Factoring or Invoice Financing – another working capital tool to prevent tying up working capital in productive receivables
  • SBA Loans – offered by many local banks and guaranteed by the Small Business Administration, an excellent instrument for a start-up business with experience in the sector, or to fund a sensible business plan.

Naturally, smaller business should expect financing alternatives to be more costly than financing sources for larger, more established businesses and therefore funding sources should be used with good reason and purpose.  Suncoast CFO Solutions can help build the case for the need for financing and sort through the multiple alternatives to identify those that are most appropriate.

Follow this link for an article entitled Alternative Financing for Small Business Owners published by and found on the Fox Business website.