The main reason for failures is due to insufficient capital they run out of cash. According to Bloomberg, 8 out of 10 entrepreneurs fail within the first 18 months. Another 50 percent fails during the first 5 years. Other reasons companies fail include lack of experience, bad situation, entry of saturated markets, investment in fixed assets, unexpected growth and poor credit arrangements. Lets add one to the list not knowing where to go to gain access to working capital.
There are private companies that will provide a loan to a company that has daily cash flow, as long as some basic requirements are met. A business owner does not need to pledge assets or have a good credit rating. There are profitable financing options for receiving corporate finance that are not considered loans. Business finance programs exist where you are not required to promise assets, have large credit or documented history. A word of caution, do not expect to get the same prices as you would get from a bank. These private lenders take more risk than a bank, so a higher return on their investment is expected. Some of the available business financing options include a Merchant Cash Advance, a Small Business Loan, Purchase Order Financing, Billing Billing and Supply Chain Financing.
Merchant Cash Advance
If your company accepts credit cards and debit cards, there is a program called Merchant Cash Advance, which has a very high degree of approval. A business owner does not need to sign in person or have good credit. A Merchant Cash Advance is not a loan but rather a purchase of your future credit or debit card receipts. The advancer buys a future amount of credit card receipts or debit card receipts at a discounted tax rate. A small portion of daily daily sales will be taken by the advocate until the amount is repaid. Typical repayment is 6 to 10 months.
Small Business loans
There is a small business loan available for business owners. The lender is more concerned about a companys daily cash flow than about credit ratings and the ability to promise assets. The business owner does not need to write in person. This small business loan has a very high degree of approval, with some basic funding requirements. The lender will take a small fixed amount of daily sales until the loan is repaid. The loan period is one year.
Has your company been working to land a large contract? Congratulations, you just got the long-awaited purchase order. When you admire your new conquest, youll see a little bit of print with the words Net 30, 45 or 60. Your company may have a cash flow issue. Suppliers and pay may need to be paid before you receive payment from your customer. If your company does not have enough available working capital or working capital to wait to be paid before you have paid your suppliers and staff, what are you doing? If your purchase order is from a reputable company, your company may receive a cash advance from the purchase order. The order order is a legal agreement to purchase a product or service from your company. A lender will know that the customer will pay as long as you meet your termination of the contract and advance you enough money to ensure that you meet your contractual obligations. A lender will be concerned about the customers ability to pay and your ability to fulfill the contract. They will not be as concerned about a companys credit rating or pledge of additional assets.
A company can be profitable and continue to go bankrupt because of poor cash flows. What deep statement. A cash flow gap can be created when a customer pays slower than a company has time to pay its employees and suppliers. The company is waiting for customers to pay before it can pay their own expenses. It can be a very serious situation and get a profitable business to go bankrupt. Fortunately, there is an alternative financing solution called Factoring of Invoice.
Factoring invoices are a business finance transaction where a company sells its accounts receivable invoices to a lender factoring company at a discount. For this type of corporate finance, there are three interested parties. One is the company providing the service or the goods to the customer, two are the factoring company that will give the company an advance, and three are the end customer who received the goods or services. When the company provides goods or services to the end customer, an invoice is created. That invoice is then bought by a factoring company at a discount. The factoring company will pass the company a large part of the value of the invoice.