<br/> <br/> The thought that alternatives readily available for medium-sized business owners fall to selections between traditional financing, alternative financing , or venture capital is the wrong way to consider financing medium-sized business initiatives. Even though the business relies entirely on debt financing to fuel its capital demands, business owners should examine the financing options readily available to them as a 'portfolio' of investment choices.<br/><br/>One size does not fit all-- two or three sizes don't fit all either.<br/><br/><br/><br/><br/> The majority of the Main Street businesses we refer to here will fuel growth and fund working capital with borrowed money or cash flow. Thankfully, there are a load of choices readily available. Regrettably, many small business owners look at the possibilities as an either/or choice to be made. I think it makes good sense to examine financing possibilities that are appropriate to different conditions and how they might work together to help small business owners find the capital they need.<br/><br/> Such as, 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 some other traditional loan is the best and only answer to the financing requirements 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 could be problematic with a term loan that takes weeks or months to fund if the small business owner wants the cash today.<br/><br/>And, the major obstacle is that many Main Street business owners don't have the credit, time in business, or revenues to meet traditional loan criteria. This is even more so agonizing for early or idea-phase startups. No history, no product, and no revenues normally mean no loan.<br/><br/>For a business owner who doesn't fit the underwriting guidelines of a traditional lender, factoring company products can really help establish credit while helping the borrower to fill his or her short-term capital demands. Alternative lenders have less rigid lending demands than does the local bank-- but that comes with higher interest rates. Due to higher interest rates, small business owners should check out repayment terms of a few months rather than a couple of years. Although factoring company financing may be a powerful tool when used the right way, it can also be very costly if misused.<br/><br/>Many small business owners who do get low-interest term loans still turn to factoring company options as a short-term bridge to a traditional term loan while they await a traditional loan to be funded. If the business owner is attempting to take advantage of an opportunity and can't an SBA or other traditional loan to close, the extra interest they pay over the two or three months they wait is well worth almost immediate availability to capital offered by receivable factoring .<br/><br/><br/><br/><br/>When looking at the many funding options readily available for small business owners, a couple 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 in order to get the loan?<br/>4. Precisely what are the underwriting requirements in addition to my credit score?<br/>5. How rapidly can the loan be funded?<br/>6. Do I require the cash now, or can I wait?<br/>7. Do I have the ability to make regular and timely payments?<br/>A small business owner should deal with his or her credit score like a priceless asset. Frequently short-term financial selections have long-term consequences. For example; a business owner that had a good business concept but no collateral, no income, and no credit was annoyed and angry that lenders weren't interested in his idea and weren't gushing themselves to grant him money. He wasn't thinking about bootstrapping because it would cause him to scale back his growth plans. It wasn't what he wished to hear, but bootstrapping his idea was the only real choice available and the approach I suggested. Many incredibly successful companies were launched by an entrepreneur who bootstrapped his way to the top.<br/><br/> Just what's the best strategy for your Main Street business? There are certainly more than one and even a mixture of many alternatives-- once size does not fit all.