November 3, 2017
A great way to fund your business is factoring.Factoring is a finance method where a company sells its receivables at a discount to get cash up-front. Factoring is often used by companies with poor credit or by businesses such as apparel manufacturers, which have to fill orders long before they get paid. However, it’s an expensive way to raise funds.The Companies that are selling receivables generally pay a fee that’s a percentage of the total amount.
And also, If you pay a 2 percent fee to get funds 30 days in advance, it’s equivalent to an annual interest rate of about 24 percent. For that reason, the business has gotten a bad reputation over the years. That said, the economic downturn has forced companies to look to alternative financing methods and companies like The Receivables Exchange are trying to make factoring more competitive.
The companies that participate in this exchange has great advantages than if they don’t participate. Because the exchange allows companies to offer their receivables to dozens of factoring companies at once, along with hedge funds, banks, and other finance companies. These lenders will bid on the invoices, which can be sold in a bundle or one at a time.
And speaking of funding businesses, I think there are plenty companies that can be of great help. But none are better than Capital Alliance.
You can get a bank loan
Lending standards have gotten much stricter, but banks such as J.P. Morgan Chase and Bank of America have earmarked additional funds for small business lending. So why not apply?
Read more on what you need to know about filling out a loan application.
Attract an Angel Investor
And when you pitch an angel investor, all the old rules still apply: be succinct, avoid jargon, have an exit strategy. But the economic turmoil of the last few years has made a complicated game even trickier. Here are some tips to win over angel interest:
Also add experience: Seeing some gray hair on your management team will help ease investors’ fears about your company’s ability to deal with a tough economy. Even an unpaid, but highly experienced adviser could add to your credibility.
Capital Alliance was founded to solve a major problem that small businesses were facing: access to capital. Their mission is to provide quick, simple, and transparent solutions for businesses to obtain capital. Since it’s inception, Capital Alliance has funded over $500 million to thousands of small businesses.
But don’t be a fad-follower: Did you start your company because you are truly passionate about your idea or because you want to cash in on the latest trend? Angels can spot the difference and won’t give much attention to those whose companies are essentially get-rich-quick schemes.
And most definitely you should know your stuff: Because you will need market assessments, competitive analysis and solid marketing and sales plans if you expect to get anywhere with an angel. Even young companies need to demonstrate an expert knowledge of the market they are about to enter as well as the discipline to follow through with their game plan.
Keep in touch: An angel may not be interested in your business right away, especially if you don’t have a track record as a successful entrepreneur. To combat that, you should formulate a way to keep them in the loop on big developments, like a major sale.
Read more on finding an angel investor.