Looking For Cash? 4 Ways To Finance Your Business

Tricia Borren

December 02, 2013

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Even the best business ideas need some financing to be successful. New companies often need financing to expand or meet demand. It can be difficult to get business loans through traditional banks or government institutions. Other channels for raising funds do exist. There are four ways to raise cash to help finance a business.

Pawn Loans
Entrepreneurs who have valuable assets but little cash can find financing through pawn loans. Pawn loans are basically very fast loans that are secured by personal assets or business assets. The assets could be jewelry, a vehicle or expensive electronics. One of the advantages of pawn loans is that there is little paperwork or hassle. Pawn loans can provide enough money to start a business or to make an improvement as long as the owner has sufficient personal assets to secure the financing.

Factoring
Factoring involves selling a portion of all incoming receivables to a third party known as a factor. The factor immediately pays a percentage of the receivables in cash. The factor collects on the invoices and then sends the rest of the face value of the receivables back to the client less a small percentage fee. Salt Lake City fleet factoring services can provide financing to businesses in the freight or transportation industry. Factoring is a way to get financing without going through everything required for a traditional business loan.

Crowdfunding
Crowdfunding means a business posts ideas or plans on a public website. Regular people can then choose to invest in the business. Most investments are small. Businesses that gain the attention of thousands of small investors, however, can raise funds very quickly and in large quantities. Some crowdfunding sites give investors equity. Other sites allow businesses to reward investors with discounts or free products and services. The main complication is that crowdfunding is unpredictable and governed by different rules depending on the site.

Microloans
A final way to finance a new business is through microloans. Microloans are very small loans usually given by individuals or nonprofit organizations. Microloans do not require stringent credit or background checks. They are also much smaller than regular business loans. Entrepreneurs can start with a single small loan and then get increasingly larger loans as the company grows. This can provide the financing needed to build a business.

Business owners need to be aware of expenditures, revenue and forecasts when looking for new financing. Choosing the wrong type of financing can leave a business in a very poor position where raising funds in the future becomes even more difficult. It is important to always consider the exact details of each financing option.