Financing of SMEs to raise capital and acquire the next small business financing crisis and the credit crunch, there is no doubt that more than anything apple. Especially true for fast-growing companies tend to consume more resources to fuel its growth. If you are not careful, they themselves literally to business growth.
It is still the middle of all gloom and doom, however, is important to note one thing: the options that can be used in the financing of small businesses. It is simply knowing how to prepare egg location.
Where to look
You can rely on three main sources of finance for small and medium enterprises.
Financing SMEs in commercial banks – most owners, they think of when they think of the first source. If you can not pay the loan back with interest the bank and guarantees securing the loan usually promised by the business.
On the plus side, the debt, especially the current environment of low interest rates is relatively cheap. The community in better financial condition than they are big banks, because banks are usually good for the financing of small businesses factoring today to begin your search is the place. Visit the big banks, if you focus on bank lending and small business finance areas to talk to someone should.
Note that it requires more diligence and transparency on the part of SMEs in order to maintain a loan in today’s credit environment. Most banks in order to have the ability of companies to pay the amount of the request and the possibility of extending the reporting requirements and record their material considerably looking for a little more detail.
Unlike the company money lending business capital of the company and the interest paid by the bank, which contains such assets are SME financing, venture capital investors receive ownership of shares in the investment company of the finance as we know. Company funds and venture capital investors venture capital angel is a specialized type.
In the long term, equity funds must be paid as a bank loan, it costs more to enter. What is the reason? You because the future value of each part of the property for SME financing cost of venture capital firm to provide nothing but does not know can not share the property. Furthermore, the limitations of the venture capital firm sometimes financial placed very high speeds, and return on investment (ROI) of their expectations.
Commercial finance company – provides a specialized type of SME financing known as asset-based lending (ABL or more) non-traditional lenders. And the accounts receivable (A / R) Financing: ABL There are two basic types to consider.
Usually between 2-5% discount for factoring companies sell finance receivables outstanding company. $ 9,800 – For example, if one takes into account bond sales of $ 10,000 from $ 9,500 can get. Benefits rather than waiting 30 to 60 to 90 days (or more) will receive cash immediately. Customers feel that the company also performs a credit check and bad risks and find a credit limit of adequate credit analysis reports.
A / R finance you borrow money from a finance company and is using accounts receivable as collateral. The company to borrow in this way the client without a high concentration of strong sales and financial reporting functions and diverse customer base proved to be able to.