Invoice to Cash Funding, LLC
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Copyright 2008 Invoice to Cash Funding, LLC
Your Maryland, DC & Virginia source to Access Business Capital
240-252-4477
888-FUND-TLC
888-386-3852
Financing Options
OBLIGATING YOUR COMPANY WITH A BUSINESS LOAN SHOULD NOT BE TAKEN LIGHTLY. LET'S REVIEW YOUR BUSINESS FINANCING OPTIONS.
There are many options to use to fund your business. Let's look at each of them in more detail. Also, it is worth noting that usually a number of the methods below are beneficial and ideal when used together to provide the business the resources needed to succeed, especially in today's marketplace.
• Loaning your own personal capital:
One of the best and most common for start-up businesses.
Loaning (or giving) your own personal is usually the first source of funding for start-up businesses. This may be the most profitable...
(continued) for as the business grows and becomes more profitable, you won't have to share these funds with a bank or commercial lender or another investor other than yourself. This also gives you the most flexibility since you may be the only one you need to ask for approval to use the funds. (That is, of course, unless your money is yours alone.
If you are married, for example, there may be a higher power that needs to be convinced. Don't let this discourage you, however. Often this is God's way of keeping our checks and balances in order. If your spouse is questions or concerns there is probably a good reason. Maybe something you overlooked or worse, something you really don't want to admit. Take advantage of this often wise council.)
• Borrowing from friends or family:
Can be a good option depending on who you know and your experience in the business you are looking to fund.
Many people have a relative or friend with assets just looking for a good opportunity to ...
(continued) invest in. You may know this person and just not be aware of the fact. Don't be afraid to ask around. He or she may be happy to give you the business loan you need. Borrowing from someone who knows you can be a vote of confidence in you and just that fact alone can help propel your success.
You can structure the terms of the loan where the interest is deferred for a set period of time or to begin immediately upon funding. The loan payments can also be deferred for a set period of time (even if the interest charged begins immediately) or begin soon after the loan is funded. You could even give a portion of the business ownership to the lender in lieu of a portion of the loan.
Make sure you have already put a business plan in place before traveling too far down this path. If you don't have one, here is a link to a site where you can create your business plan for free. (If you would like personal assistance in creating a business plan give us a call and we can put you in touch with someone who can provide the assistance you need.) Partnering with a friend or family member is covered in more detail in the next section.
• Partnering with a friend or family member:
Also can be a good choice for a start-up business. Especially if you need the time to get the business established before beginning to make payments.
Similar to borrowing from a friend or family member, you must find someone who has confidence in …
(continued) your ability to produce a profit and/or grow your business.
This strategy can be implemented in a few ways. Often the investing partner doesn't want to be involved in the day to day operations of the business and doesn't want to take on the liabilities of the business (other than contributing a set amount of capital). For this, a limited partnership may be the choice for you.
With a limited partnership, the capital the friend or family member puts up will not typically have to be paid back as a regular commercial loan would be since the limited partner is not actually loaning the money but buying an interest in the business.
The downside to you, however, is that years from now when the business has grown and is more profitable, the value of the limited partner's interest can be much higher than the cost of the initial investment.
The up side is that for you is that not having another loan payment to make in your businesses formative years could mean the difference of success over failure.
The general partner(s) takes full responsibility for the partnership, including the debts and liabilities of the partnership. (Note: the general partner can be a person or other entity.) The limited partner(s) does not have direct control of the business and assumes no liability for the business. The limited partner(s) do have voting rights and can be an agent, employee or contractor of the limited partnership or of the general partner. For more information on your options on how to structure your business give us a call. We will be happy to assist.
• Bank business loans / commercial loans:
Banks are often the first place business owners look for financing their...
(continued) business. There are several types of bank loans. Further, there are business banks that specialize in helping businesses and may provide the tailored fit you are looking for. We at Invoice to Cash Funding have a great partnership relationship with some of the local business banks in our area. They love helping small businesses get started right and grow. Give us a call for more information.
• Loaning your own personal capital:
One of the best and most common for start-up businesses.
Loaning (or giving) your own personal is usually the first source of funding for start-up businesses. This may be the most profitable ... (continue)
• Borrowing from friends or family:
Can be a good option depending on who you know and your experience in the business you are looking to fund.
Many people have a relative or friend with assets just looking for a good opportunity to ... (continue)
• Partnering with a friend or family member:
Also can be a good choice for a start-up business. Especially if you need the time to get the business established before beginning to make payments.
Similar to borrowing from a friend or family member, you must find someone who has confidence in … (continue)
• Bank business loans / commercial loans:
Banks are often the first place business owners look for financing their... (continue)
• Bad Credit Loans:
If your business has fallen on some hard times currently or in the recent past, it will likely be quite hard to find a lender willing to offer a commercial loan even... (continue)
• Limited Capital / Signature Loans:
If your business is a new start-up business or a type of business that doesn't have much capital to secure... (continue)
• Home mortgage / home equity loans:
Putting your house on the line may sound scary and rightly so. Going this route puts the place you live on the line should something... (continue)
There are many options to use to fund your business. Let's look at each of them in more detail. Also, it is worth noting that usually a number of the methods below are beneficial and ideal when used together to provide the business the resources needed to succeed, especially in today's marketplace.
(For your convenience so you can quickly skim the topics we have included the headings and first portion here with a link to the full text below.)
• Private Investor lending:
Private investor loans can be hard to come by but has it's benefits as well. There are a number of ways to find... (continue)
• Private investor partnering:
Partnering with a private investor may be the most flexible of all options because the limits are nearly endless. They just need to be agreed to by the business owner(s) and the private investor(s). However, partnering with an investor can also be the most complicated due all of the details... (continue)
• Initial Public Offerings, IPOs:
Taking your company public can be quite profitable, however the obstacles to overcome are extensive, time consuming and costly. However, they are one of the few options available for large machine intensive businesses.
• Mergers and acquisitions:
If you have a good solid company or a company which offers a select product or service that another, more capital-rich company is interested in adding to their offerings, you may find yourself in a position of merging with another, larger company.
• Small Business Loans:
Small business commercial loans can be obtained from local or national banks and credit unions. Small business loans are covered in depth below.
• Credit Card Merchant account loans:
Businesses that accept credit cards from their customers may be able to get an advance on their credit card receipts. Typically, they can receive up to three times... (continue)
• Invoice Factoring:
A great loan alternative for certain situations.
As with each of the other methods of obtaining cash for your business, invoice factoring has it's own... (continue)

~~ Term loans:
These loans can be secured or unsecured depending on the credit worthiness of the business. These loans are for a specific purpose and for a specific time frame. Sometimes the bank may require the business owner to co-sign or guarantee the loan. This is most definitely true for start up businesses which have not yet established a track record yet.
~~ Lines of Credit:
A line of credit is a great tool to have in place. Even if it is not used often or at all, having it available just in case, can be a blessing when you least expect it.
~~ Letters of Credit:
A letter of credit is a statement from your bank verifying that your business is sound and credit worthy. This can help when you set up an account with a new supplier or vendor.
~~ Real Estate:
If your business owns real estate, cash can be borrowed against it for investing in the business. And, of course, if your business is in a position to purchase real estate for the business, banks can assist with real estate financing.
~~ Construction:
If your business is construction or development, banks can assist in this area. Whether you are developing commercial properties or residential projects, though the market is tighter these days, there is still some construction and construction lending going on. Call Invoice to Cash Funding for a referral.
~~ Small Business Administration loans (SBA loans):
SBA loans or SBA financing can be a great source for small businesses. However, typically the business needs to have applied for and been turned down for a traditional small business loan. There are many other stipulations but it is certainly an option that may be worth pursuing. The SBA has a program they call the Certified Lenders Program (CLP) for this program, they have a list of lenders that have been certified and have a successful track record of SBA lending. These commercial lenders have a thorough understanding of the SBA requirements and what it takes for businesses to assist businesses obtain financial assistance with the SBA program. Check the SBA website for additional information. We at Invoice to Cash Funding have a great partnership relationship and can refer you personally to an SBA lender in our area who is trustworthy and fully qualified assist you with the entire SBA loan process.
• Bad Credit Loans:
If your business has fallen on some hard times currently or in the recent past, it will likely be quite hard to find a lender willing to offer a commercial loan even...
(continued) before the current banking crisis. If your business has a bad credit history for whatever reason, invoice factoring may be your best option. Since invoice factoring looks not at your business's credit but rather, at your customer's payment history. You may also consider some of the other options listed such as borrowing from or partnering with a friend or family member or finding a private investor. These options, however, may be harder to obtain for the same reasons your business has bad credit. Still it may be worth pursuing.
• Limited Capital / Signature Loans:
If your business is a new start-up business or a type of business that doesn't have much capital to secure...
(continued) against the debt of a commercial business loan, and are willing to use your personal assets to secure the loan, there is a reasonable chance you will be able to find a bank or other lender who will be willing to provide the cash your business needs. They will likely treat the loan not a a business loan but a personal loan. This means that they will also be looking at your current and past personal income history.
• Home mortgage / home equity loans:
Putting your house on the line may sound scary and rightly so. Going this route puts the place you live on the line should something...
(continued) go wrong or if the business does not succeed. Many have started this way, have created a profitable business doing so and are glad they did. Having said that, I would not recommend it before the economy took the downturn it did and certainly not now. Whether your business is a new start-up business or is an established business but experiencing a cash crunch, I would recommend just about any other option available to you.
• Private Investor lending:
Private investor loans can be hard to come by but has it's benefits as well. There are a number of ways to find...
(continued) private investors to make commercial loans to or invest in your business. You could run an advertisement in a local newspaper or check the classified section of some of the trade publications for your trade. Often the best source, however, is asking some of your business associates if they know someone who may fit the bill. Private investor loans is typically one of the most expensive options available. Having said that, in this current market condition, there is a lot of cash sitting on the sidelines earning almost nothing as far as returns are concerned. So, in this current market condition could be more reasonable than ever.
• Private investor partnering:
Partnering with a private investor may be the most flexible of all options because the limits are nearly endless. They just need to be agreed to by the business owner(s) and the private investor(s). However, partnering with an investor can also be the most complicated due all of the details...
(continued) involved that need to be ironed out. The flexibility of the details could be what makes this the best option to create a profitable win-win situation for the business and the private investor. Make sure you put all the details in writing and have an attorney review it for legalities and to protect both parties. By the way, there is an great legal service for business owners. For a quite reasonable monthly fee, one can get access to top-rated law firms across the country. The plans vary by state but generally, the business can get free document review (up to 15 pages per document) collection letters written, defense representation lawsuits against the business and several other services included free other than the small monthly fee. Plus the business can get a huge 25% discount off the law firm's usual rates on other legal services. The company has been around for over 15 years and the services is nationwide. Click here for more information. I highly recommend it.
• Initial Public Offerings, IPOs:
Taking your company public can be quite profitable, however the obstacles to overcome are extensive, time consuming and costly. However, they are one of the few options available for large machine intensive businesses.
• Mergers and acquisitions:
If you have a good solid company or a company which offers a select product or service that another, more capital-rich company is interested in adding to their offerings, you may find yourself in a position of...
(continued) merging with another, larger company.
• Small Business Loans:
Small business commercial loans can be obtained from local or national banks and credit unions. Small business loans are covered in depth below.
• Credit Card Merchant account loans:
Businesses that accept credit cards from their customers may be able to get an advance on their credit card receipts. Typically, they can receive up to three times...
(continued) their average monthly credit card income. These funds are then paid back over the next several months of credit card income. It is important to note that the money advanced to the business (merchant) is not a loan but are termed a "fee". Further, the advance is not based on the credit worthiness of the business but rather the track record of the credit card receipts. For these reasons, this type of funding is does not require the typical bank qualifications that a business loan requires and is often easy to if the business has a good track record of customers paying by credit card. Now for the bad news. Also, for these same reasons, this is generally one of the most expensive methods to obtain funds. And since the money advanced is considered a fee and not interest, it is not subject to the same rules that govern general lending laws.
• Invoice Factoring:
A great loan alternative for certain situations.
As with each of the other methods of obtaining cash for your business, invoice factoring has it's own...
(continued) special niches. It is a great alternative to commercial loans. Some of the situations invoice factoring is a great business loan alternative are:
~ Short-term hiccups in the business
~ Business start-ups (limited initial capital or collateral)
~ Under capitalized businesses
~ Businesses experiencing a growth spurt
Businesses that don't have the equipment or collateral needed for traditional bank or commercial financing and businesses experiencing or primed to experience a growth spurt. Invoice factoring works well in these areas because invoice factoring is not a loan and thus does not entail all the requirements and restrictions of a loan. In fact, since factoring is not a loan, it does not count on as a liability on the ledger.
One area is when a business experiences a short-term hiccup for one reason or another. Having an account set up with a reputable factoring company in advance is almost like having an ATM machine right in your office. When you need funds to take care some bills and it would be disadvantageous to wait for your customer to pay you, typically you fax the invoice to the factor.
We at Invoice to Cash Funding hopes our efforts here have helped you to assess and determine what is right and best for your business. Our goal is to serve you in any way we can.
