Non-Traditional Funding Options

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 Ideally small businesses would immediately have the funding they desire, and there wouldn’t be any financial issues from helping them succeed.  Unfortunately that is rarely the case.  At times when traditional banking loans fail, what are the other options available for funding?

Factoring

 

This option is great for companies that are looking for a fast transaction that will leave them with cash in their hands quickly.  The premise behind factoring consists of the company selling their accounts receivable at a discount, giving the company quick cash without having to wait the normal allotted time that it takes to gain access to the funds.  In this type of funding the financer is much more interested in the company’s accounts receivable than their credit history.  The great thing about this type of financing is that the financer would assume the risk of the account receivable.  The obvious con of factoring would be the discount that is being given to the financer, and the fees that would entail.

Merchant Cash Advance

Cash advances are proving to be a viable option for many businesses.  These are also great for companies who are in need for cash in a timely manner.  The cash is given in a lump sum, and the borrower will promise the lender a share of their future credit card sales.  This is also a great option for companies that do not have the best credit history.  The appealing thing about cash advances is that they do not have the interest rates or fixed payments that most financing options have.  With that being said, the percentage of the credit card receivables that is taken is usually hefty.

Being turned away from a traditional funding source does not mean game over.  These are just a few of the non-traditional financing options that are available for small businesses. 

 

How Do Merchant Cash Advance work?

ACT: Helping Finance Your Business

While American Corporate Turnaround does a lot of debt restructuring, they also work with many different lenders for financing your business as well. Check out the following options to see if any are right for you.

One way ACT offers financing is with account receivable factoring. This is when you would sell your account receivables to others at a discounted rate in exchange for immediate cash. If you are in a hurry to get a certain amount of cash but can’t wait for the person who owes you to pay it, this is a very good option.

Another option is merchant cash advance. This is very similar to a receivable factoring in the sense that you get immediate payment. The difference between the two is that you are agreeing to pay the third party a percentage of future sales instead of selling sales that already occurred.

Next, there is equipment leasing.  Equipment leasing is a good option because there is a low out of pocket expense involved. Everything can be included in the lease and this frees up your money for you.

Asset based financing is also a good way to finance a company. This provides working capital that is secured by the company’s assets.

Last is purchase order financing. This is done when a distributor doesn’t have the funds to pay the manufacturer but does have a purchase order that needs to be filled. A purchase order company would pay the manufacturer to complete the order then collects payment from the buyers. The company would then take their fee before releasing the funds to the distributor.

American Corporate Turnaround has many great options for assisting you in financing your business. Let us help out and see if we can help make your business grow.

When Your Organization Needs Specialized Financing

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There’s more to corporate economics than debt restricting and finding solutions for unfortunate worst-case scenarios. When your business is entering a time of growth dependent on receiving the right financing then you will need to work with professionals who can assure you the funds your organization requires. Working with professionals to help you establish your financing is essential, especially if your organization has a negative mark or two on its lending history.

The main reason to work with a professional company to help arrange your financing is a simple one - the company you work will provide you with information on, and access to, funds you didn’t even know existed. Some of these specialized forms of financing include merchant cash advances, equipment leasing, asset based financing, purchase order financing, and accounts receivable factoring. The financing option you ultimately choose to pursue depends a lot on your current economic situation and your upcoming needs.

For example, equipment leasing offers a great way to increase the size and capacity of your business even when you don’t have a whole lot of cash to spend on expansion. By leasing equipment for when you need it you will save significant sums compared with purchasing money outright, and you’ll be able to spread those remaining costs out over a long period of time.

On the other hand, your expansion plans may require having a lot of cash on hand - cash your organization doesn’t currently have to spend. When that’s the case, you can use a merchant cash advance. This form of financing is easy to understand. A merchant cash advance is a big lump sum lent to your organization with the agreement that your organization will serve up a certain percentage of your future credit and debit card sales to the lending institution.

As you can see, most organizations have significantly greater and more varied financing options than they may have originally believed. By selecting and acquiring the right form of financing to meet your needs, we’re happy to help your company grow to the next level - even if you’ve already written growth off as impossible.