What financing is right for your business?

Most businesses need financing. Unless you win the lottery or inherit luck, most people start a business with their own funds or combinations of funds and their financing. Even established businesses need financing at one time or another.

Cash flows differ from profits and profits do not guarantee money in the bank. Employers need financing for inventory, payroll, expansion, develop and market new products, to enter new markets, marketing, or move to new locations.

Defining and choosing appropriate financing for your business can be a complicated and frightening task. Making the wrong agreement can lead to a number of problems. Understand that the road to finance is unclear or predictable. Financing strategies must be driven by company and personal goals, with financial needs, and ultimately by available alternatives. However, it is the relative bargaining power of entrepreneurs with investors and skills in managing and managing the financial training process that really regulates the final results. So be prepared to negotiate with financing strategies and finish finances.

The following is a short complicated in the type of financing chosen for commercial businesses.

Asset-based loans

Loans are guaranteed by inventory or receivables and sometimes with hard assets such as property, factories and equipment.

Bank loan

Loans paid by interest over time. Business will need a strong cash flow, solid management, and the absence of things that can make a loan become default.

Bridge financing

Short-term loans to get the company over financial humps such as achieving the next round of business financing or filling other financing to complete the acquisition.

Leasing equipment.

Financing to rent equipment instead of buying. It is provided by the Bank, a subsidiary of equipment manufacturers and leasing companies. In some cases, investment bankers and brokers will bring together parties.


This is when a company sells its trade accounts. The buyer then assumes the risk of collection of the debt.

Mezzanine debt

Debt with equity-based options, such as warrants, which gives the right to the holder to buy a number of effects specified at the selected price for a certain period of time. Mezzanine debt is generally insecure or has a lower priority, which means lenders stand further in the line if bankruptcy occurs. This debt meets the gap between senior lenders, such as banks, and equity investors.

Real Estate Loans

Loans on new properties – which are short-term construction loans – or on existing and improved properties. The latter usually involves buildings, retail and multi-family complexes that are at least 2 years old and 85% rented.

Sales / Leasback Financing

Sell ​​assets, such as buildings, and rent back for a certain period of time. Assets are generally sold with market value.

Start-up financing

Loans for business at their earliest stage of development.

Working capital loans

Short-term loans to buy assets that provide income. Working capital is used to carry out daily operations, and is defined as current assets reduced smooth liabilities.

It’s always better to survive without taking debt. But on the other hand, most businesses need to obtain financing at one point or another. Home offices tend to need financing rather than the business location you rent. One-person operation tends to need financing than one with employees.