Monday, February 6, 2012

Funding Your Small Business - Innovative Articles for Readers

You are at : Home | Business ??? By : Christine Dunbar ?? zero times read
Submitted 2012-02-05 05:49:24 Working capital is one of the key element to keep a business running competitive and in a good credit standing. Having the cash available is essential. There are many different sources to fund a small business.

1. If your business accepts credit cards, there are lenders who will purchase credit cards receipts and in return will give cash capital. This type of funding is called "Cash Advance" has a limit of $ 100,000.00, is paid from automatic deduction of credit cards sales.

2. Accounts Receivables may be sold to lenders who will in return give cash capital. A small amount is deducted from the purchase and the cash is available immediately.

3. Sale and Leaseback Financing. If the business owns equipment it can be sold to a lender for cash. A monthly payment schedule is setup to pay back in order to regain ownership of the equipment. Selling an asset with a contract to" leaseback " has one reverse situation which is that sales tax may apply in the transaction.

4. Business Credit Cards. This type of credit card is issued in the business name, it can be used to obtain cash and also to purchase items for business needs. The average credit limit is $ 25,000.00 and is approved based on your personal credit score. A business credit card can help by not having to use cash for some purchases.

5. Micro Loans. These are loans guaranteed by the SBA but they take less time for approval. The credit score is not the only fact to be considered, also the business earnings projections and management of operations. It will provide cash capital.

Principals to Review

1. Debt Financing is mostly is done through the banks. If you have a personal relationship with a bank, if they feel comfortable with your company's cash flow, liquidity of assets, as well as other requirements, they may extend a line of credit. If approved a repayment schedule is set up and interest rate is added.
On this type of loan it is important to have a business plan, also you must be acquainted with the financial situation of the business. Be prepared to answer any questions pertaining to the ins and outs of income and expenses.

2. Grants - If technology is your business, you may apply for a grant through the SBA with the Small Business Innovation Research or (SBIR) program, a government agency.

3. Equity Financing - There are hundreds if not more companies that are financing through private or institutions in exchange for an equity ownership stake. They are family and friends, private investors called "angel investors" and also professional investors called Venture Capitalist.

The Cons

a. Family and friends have limited amount of funding and if the money is lost, relative relations sometimes are too. Be careful not to put such relationships in jeopardy.

b. Angel investors are extremely difficult to find.

c. Venture Capitalists usually want to share control of your business.

When looking to fund your small business, finding the right source and terms are important factors before making a commitment.

Author Resource:- Christine writes about a variety of business topics. To learn more about equipment finance visit http://factorfunding.com/services/equipment_finance.htm.
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By: Christine Dunbar

Working capital is one of the key element to keep a business running competitive and in a good credit standing. Having the cash available is essential. There are many different sources to fund a small business.

  1. If your business accepts credit cards, there are lenders who will purchase credit cards receipts and in return will give cash capital. This type of funding is called "Cash Advance" has a limit of $ 100,000.00, is paid from automatic deduction of credit cards sales.

  2. Accounts Receivables may be sold to lenders who will in return give cash capital. A small amount is deducted from the purchase and the cash is available immediately.

  3. Sale and Leaseback Financing. If the business owns equipment it can be sold to a lender for cash. A monthly payment schedule is setup to pay back in order to regain ownership of the equipment. Selling an asset with a contract to" leaseback " has one reverse situation which is that sales tax may apply in the transaction.

  4. Business Credit Cards. This type of credit card is issued in the business name, it can be used to obtain cash and also to purchase items for business needs. The average credit limit is $ 25,000.00 and is approved based on your personal credit score. A business credit card can help by not having to use cash for some purchases.

  5. Micro Loans. These are loans guaranteed by the SBA but they take less time for approval. The credit score is not the only fact to be considered, also the business earnings projections and management of operations. It will provide cash capital.

Principals to Review

  1. Debt Financing is mostly is done through the banks. If you have a personal relationship with a bank, if they feel comfortable with your company's cash flow, liquidity of assets, as well as other requirements, they may extend a line of credit. If approved a repayment schedule is set up and interest rate is added. On this type of loan it is important to have a business plan, also you must be acquainted with the financial situation of the business. Be prepared to answer any questions pertaining to the ins and outs of income and expenses.

  2. Grants - If technology is your business, you may apply for a grant through the SBA with the Small Business Innovation Research or (SBIR) program, a government agency.

  3. Equity Financing - There are hundreds if not more companies that are financing through private or institutions in exchange for an equity ownership stake. They are family and friends, private investors called "angel investors" and also professional investors called Venture Capitalist.

The Cons

a. Family and friends have limited amount of funding and if the money is lost, relative relations sometimes are too. Be careful not to put such relationships in jeopardy.

b. Angel investors are extremely difficult to find.

c. Venture Capitalists usually want to share control of your business.

When looking to fund your small business, finding the right source and terms are important factors before making a commitment.

Author Resource:->??Christine writes about a variety of business topics. To learn more about equipment finance visit http://factorfunding.com/services/equipment_finance.htm.

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