Uncommon Funding Options for Middle Sized Companies
Own a midsized company that needs funding? Read this article to learn how to fund your business.Getting any type of business financing has been incredibly challenging for business owners. One of the market segments that has been most affected by this are middle sized companies. Although bigger than their small company counterparts, they are usually not big enough to qualify for the business financing options that are available to larger companies. But without financing, most will never grow or flourish.
One alternative is to go the conventional route and try to get a business loan (or a line of credit) from a bank or a lending institution. However, credit requirements have been tighten substantially and few businesses are able to qualify for any type of financing. And those that do must be ready to provide and substantiate a long standing track record of profitability. Additionally, both companies and business owners can expect to put more collateral than previously required to secure the loan. Although conventional business financing may be out of reach for some companies for the time being, there are other options that can be used to finance their growth.
One alternative is to use invoice factoring. This type of financing is ideal for companies that have clients that pay in 30 to 60 days, but needs the funds sooner. Factoring helps businesses that need to convert invoices into cash to meet payroll or start new projects. One advantage of factoring over other alternatives is that factoring companies are most interested in the strength of your invoices, as that represents a company's best collateral. So a midsize company that has no other collateral than invoices from strong clients can usually qualify. Companies that usually benefit from this type of financing are labor intensive businesses, such as staffing agencies, and consulting companies among others.
But factoring can't always help every company. Consider this example. Suppose a product reseller, gets a large order from a retailer. The reseller needs funds to buy the product from their supplier (or manufacturer), in order to fulfill the purchase order. One good alternative is to use purchase order financing. Purchase order funding can provide the funds to pay the supplier, enabling them to fulfill the order. The transaction is settled once the retailer pays for the goods. Qualifying for purchase order funding is harder than qualifying for invoice factoring. To qualify, the transaction must have a minimum of 20% gross margins and the client must buy the finished goods from their supplier.
Although not widely used yet, these business financing alternatives have been gaining traction in the current economy. They enable mid size businesses to grow by allowing them to leverage on their most important assets - the purchase orders and invoices from their customer base.
Source: Free Articles from ArticlesFactory.com
Next page: Funding Applications
Bookmark/Share This Page:
Funding Applications News
United Way taking funding applications - Wisconsin Rapids Tribune
United Way taking funding applications
Wisconsin Rapids Tribune
WISCONSIN RAPIDS – United Way of Inner Wisconsin is accepting funding applications for 2017 programming through March 11. Health and human service agencies in south Wood County and Adams County can apply for United Way funding for programs ...
Want to review art funding applications? Feb. 29 is deadline - NeighborNewspapers.com
Want to review art funding applications? Feb. 29 is deadline
The Fulton County Arts and Culture department's contracts for services program is seeking individuals interested in reviewing applications for cultural funding granted by the county commission for the 2016 contract cycle. Each year the department ...
Innovation funding applications open to small communities - Northern Star
Innovation funding applications open to small communities
COUNCILS in rural and regional NSW that are not part of a merger proposal and have communities of less than 10,000 people can apply for a one-off Innovation Fund grant. Member for Lismore Thomas George encouraged Kyogle Council to apply, to help ...