mercredi 19 octobre 2016

Funding for Start-Ups

I deal with business owners of all forms on a daily basis. All of them being at different stages in their development. What I see a lot is that not a lot of them are really educated when it comes to what type of funding they should go after in their particular situation. There are a number of different types of funding choices out there but the big ones would be collateral based, financial based, and debt based. All of these are beneficial in their own way depending on the situation of the business owner. However, I have seen a lot of business owners take the wrong form of funding and it ended badly for them and ended up doing more harm than good.

Every business owner should do as much research as possible before jumping into bed with any lender. Fully educate yourself on the type of funding, the terms, the payback structure, etc. As the client, your goal should be to know the product so well that you could work for the company you're using. The safest route for any company big or small when getting started would be establishing business credit. This is a healthy way to get the funding you need to grow or start your business without risking too much personally. Below are the top 5 benefits to establishing credit for your business.

Our Business credit lines do not report to the personal credit of the business owner. This means that the business owner can use the strength of their personal credit in order to establish business lines or credit that only report to the business. This is huge for a new business owner who would without knowing the consequences typically put huge startup expenses on his personal credit and lower his scores drastically. Any time you get above 30% utilized it affects your score greatly. This will also affect the ability of the business owner to use his personal credit for other things in his life, like personal things!

No Collateral required! This is important from a risk standpoint. Many new business owners are blinded by their vision of the business. This makes it easy to have tunnel vision and only see your business as a definite success, so putting up your property against a loan is a no brainer. There is obviously a big risk in this especially if we are talking about a large sum of money and your family home. If the business fails, worst case scenario you lose that property.

Stated Income (No Proven Financials). Some, not all business lines of credit are stated income. Stated income simply means that the client does not have to provide a bank statement proving how much the business is making or prove his personal income. This is great for startups or companies who just haven't made anything yet or are operating at a loss. Or if the business owner does not make a lot personally but wants to start a business which requires a large amount of start-up capital.

Keep all your equity! The last thing a new business owner wants to do is give up a piece of their company. However, this is the route a lot choose to go. Business owners that do not know their options often choose to go the route of an investor who takes an equity stake in the company in return for the capital infusion the business needs.

There are a lot of options out there for business owners. The best thing is always to do your due diligence before jumping into anything. Make sure you are in full understanding of what you are signing up for and always ask a lot of questions.

If interested in seeing if you qualify at no cost or have and questions click HERE and a consultant will reach out within a business day


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