Small Business Financing Options You May Not Be Aware Of
A conventional bank loan is not the only source of small business financing. “It’s a very good opportunity right now for small businesses to seek financing, and there’s a lot of unconventional forms of financing now,” says Jonas Cohen, managing director of Fuller Landau Consulting Ltd. (“Taking it to the bank … or not”, Eric Lam, Financial Post, Aug. 11, 2009).
What are these unconventional forms of small business financing? Mr. Cohen discusses three:
- an asset-based loan where your inventory is used as collateral;
- contract financing, where the lender finances a purchase order instead of the manufacturing process prior to purchase and gets an agreed-upon cut of the profit when the transaction is complete;
- or using a sale-leaseback transaction, where you sell your business property to yourself, a holding company or an investor and then agree to a long-term lease to retain the use of the site.
The moral of the story is that if you can’t get a traditional bank loan, don’t give up; there are other sources and types of financing out there. If you can’t find a bank that is willing to loan you what you need, a private lending firm might.
Eric Lam’s article includes a five point checklist for small businesses that are shopping for a loan to increase their chances of getting the small business financing they need.
(Note that the article is discussing small business financing possibilities for growth, not for startups, a whole different kettle of fish.)
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August 23, 2009 3:42 AM
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