<br/> <br/> The idea that choices readily available for small business owners fall to solutions between traditional financing, invoice factoring companies , or venture capital is the wrong way to take a look at funding medium-sized business efforts. Even though the business relies entirely on debt financing to sustain its capital needs, business owners should examine the financing options readily available to them as a 'portfolio' of investment possibilities.<br/>One size does not fit all-- two or three sizes don't fit all either.<br/> Many of the Main Street businesses we mention here will sustain growth and fund working capital with borrowed money or cash flow. Thankfully, there are a load of possibilities available. Regrettably, many small business owners consider the options as an either/or choice to be made. I think it makes sense to examine financing alternatives that are appropriate to different circumstances and how they might work together to help small business owners find the capital they need.<br/> As an example, a good relationship with a community banker is crucial to the long-term health of a small business. That's not to say an SBA loan or other traditional loan is the most ideal and only solution to the financing needs of the local dry cleaner or restaurant. Yes, interest rates are lower on a traditional fixed-term loan, but how quickly a small business owner can get capital might be difficult with a term loan that takes weeks or months to fund if the small business owner needs to have the cash today.<br/>And, the elephant in the room is that many Main Street business owners don't have the credit, time in business, or revenues to comply with traditional loan criteria. This is particularly distressing for early or idea-phase startups. No history, no product, and no revenues generally mean no loan.<br/>For a business owner who doesn't fit the underwriting demands of a traditional lender, invoice factoring company products can really help establish credit while helping the borrower to fill his or her short-term capital requirements. Alternative lenders have less rigid lending guidelines than does the local bank-- but that comes with higher interest rates. As a result of a lot higher interest rates, small business owners should check out repayment terms of a few months rather than a couple of years. Although alternative financing can possibly be a potent tool when used correctly, it can also be very costly if misused.<br/>Many small business owners who do get low-interest term loans still resort alternative financing techniques as a short-term bridge to a traditional term loan while they wait for a traditional loan to become funded. If the business owner is trying to take advantage of an opportunity and can't expect an SBA or other traditional loan to close, the extra interest they pay factoring companies over the two or three months they wait is well worth almost instant accessibility to capital offered by invoice factoring .<br/>When checking out the many financing alternatives readily available for small business owners, several of the questions that should be asked include:.<br/>1. What is the range of terms offered?<br/>2. Are there any upfront costs?<br/>3. What is the minimum credit score needed to obtain the loan?<br/>4. Precisely what are the underwriting needs in addition to my credit score?<br/>5. Just how promptly can the loan be funded?<br/>6. Do I really need the cash now, or can I wait?<br/>7. Do I have the ability to make regular and prompt payments?<br/>A small business owner should manage his or her credit score like a priceless asset. Often times short-term financial selections have long-term consequences. For example; a business owner that had a very good business concept but no collateral, no income, and no credit was distressed and upset that lenders weren't fascinated by his idea and weren't falling all over themselves to give him money. He wasn't interested in bootstrapping because it would cause him to downsize his growth plans. It wasn't what he wished to hear, but bootstrapping his idea was the only real option available and the approach I suggested. Many incredibly successful companies were launched by an entrepreneur who bootstrapped his way to the top.<br/> That's the best strategy for your Main Street business? There are certainly a lot more than one or even a blend of many choices-- once size does not fit everything.