Financing Options for New Businesses

Today’s economy reveals the impact of the entrepreneurial spirit in our country. With national promotions to shop local and keep the investment in companies operating in the U.S., it has opened up new doors and financial opportunities for those ready to be their own boss. New business start-up isn’t always easy, and financing can be a major challenge when considering the road ahead. Although no one wants to start their venture by taking on debt, some try to pursue small business loans as a funding option. This is often a fruitless effort, as banks have a stringent list of requirements that most early businesses cannot meet. Other avenues might need to be pursued.


Local Banks


While it is true that many fledging ventures are turned for financing, this rejection often comes from large, corporate banks which have no connection to the community you are looking to serve. For your best chance at securing assistance, try a community bank. Their local presence provides an understanding of the demographics and trends in the area, often making them more willing to issue small business loans. If secured, it is one of the best financial options for your start-up. Banks often have significantly lower lending rates than the other financing options available.




The popular television show ‘Shark Tank’ has motivated many individuals to look to investors for financial assistance. Unfortunately, this road to help is long and hard, and usually met with the same responses of big banks. Even still, there are companies are always on the lookout for the next big thing and  willing to partner via an investment into your idea. These investors are called angel investors, and tech giants Google and Yahoo are heavy players in this arena. If you are selected, you would receive assistance but along with a contract expecting a share of your equity in the company.




In addition to small business loans and investors, a small business may take advantage of factoring to produce some quick cash. Most companies offer 30 to 60 day receivable structures, but this can cripple a business if every account waits until the last possible moment to settle the bill. Factoring allows your to sell a debtor account to a third-party lender, who will assume control of the account but only give you a portion of original bill price. While this seems like a great idea, the rates for factoring can be steep and are not advised for long-term support.


Wisely consider these options when looking to fund your new business, but press forward with your dream!

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