Creative Business Funding When You’re Not All That Creative

Let’s face it, CEOs are business people. Many of them have had no formal financial training, save for a few economics classes in college several years ago. So when it comes time to discover new ways to finance start-ups or expansions, some business owners are simply lost. Here are some creative business funding tips that you should have in your bag of tricks.

Trading Money Now for Money Later
There’s little doubt that raising capital without taking on excessive debt is the ideal situation. Vendorseek points out two strategic business funding options that require no payback and no interest.

• Factoring. Sell your accounts receivable to another entity at a discounted rate, commonly between one and twenty percent (this also relieves you of the hassle of collecting on the accounts

• Merchant Cash Advance. Sell a portion of your future credit card sales to an MCA lender for a cash advance, sometimes up to 90% of your historic sales (retail and restaurant establishments work well here)

Leveraging Other Money Vehicles
Start-up Nation lists several additional resources that can provide start-up capital for your business. Not every business has these resources; those that don’t should certainly consider adding them to the portfolio.

• Savings

• Investments

• Mortgage refinancing and home-equity loans

• Employer buyouts

• Retirement funds

Plastic Spends Just as Well
Helium reveals that creative credit card use is still a viable method of business funding, providing you are able to keep balances in check. Credit cards can fill in the gaps when bills or other commitments are due.

Fighting the Cap on Loans for Business

In the growing credit crunch, no financial entity is immune from regulation. The government is taking decisive steps to effectively curb the number and amount of business loans issued. And that means less start-up and expansion capital for everyone.

So Just What Qualifies?
In its commercial loan FAQ, Vendorseek defines the features of many loans for business, including such variants as lines of credit and qualifying markers like collateral. In the past, the number and amount of the loan was based on such factors as time in business, credit strength, income, previous credit limits, residence status and gross sales. Now the tide is turning. In the face of economic meltdown, acquisition has become increasingly limited.

Even Credit Unions Aren’t Immune
Credit unions have historically shown some of the strongest financial operations on the board. Because they're nonprofit organizations and don't have to pay taxes, they already have the upper hand over traditional banks. But federals laws have limited the amount a credit union can loan to a business based on its size, according to The News & Observer. And that’s hurting everyone.

Plastic May Get a Boost
Business owners and hopefuls that are considering using personal credit cards to fund ventures are also in for a pleasant surprise. The Los Angeles Times Business section reveals that there is new legislation in the works that would impose a 15% cap on rates for all consumer loans, including plastic.

Restaurant Financing: Merchant Resources Bring Food to the Table

In the midst of a credit crunch, there are ways that restaurants can obtain financing. Forget the traditional routes and focus on a merchant cash advance.

The Recession Formula: Capital Minus Control
QSR Magazine characterizes the difficult position that restaurateurs can find themselves in while searching for start-up or expansion capital in the midst of a recession. It all comes down to control. As traditional lenders work to reduce their level of risk, the process often leads to numerous restrictions placed on how the owner can run his or her own business. With requests ranging $500,000 to $1.5 million, for example, owners will find banks want to dictate many of the daily operations based on typical returns on that investment.

How the Merchant Cash Advance Comes into Play
An MCA can be the smartest capital-raising move an owner can make simply because the credit issue is taken out of the equation. According to Vendorseek, merchant cash vendors appropriate their advances based on expected sales receipts. This is good news for those owners with questionable credit histories. Of course, the flip side is that the restaurant should have a history of strong sales. Franchises often benefit the most from this arrangement. But what about start-ups?

Start-ups are Still Eligible for Financing
A press release form PRLog offers hope for restaurant start-ups without a history of strong sales. Rejections aside (because there will be those, also), many MCAs offer programs expressly customized for restaurateurs looking to get a venture off the ground. Requirements vary according to the MCA, but the bottom line is that it is possible to take advantage of this nontraditional form of financing.

Is Merchant Cash Advance Right for Your Internet Business?

The merchant cash advance has been revealed as an alternative deal to raise valuable business financing. As the traditional lending process tightens, vendors are looking to MCAs to fill the void. But what if your business is virtual? Can you still use merchant cash advances in funding your venture? Here’s a brief run-down of the possibilities.

The 411 on Merchant Cash Advances
BusinessWeek offers a comprehensive breakdown of the merchant funding process. MCA lenders forward businesses a lump sum payment in exchange for a share of future sales. They typically target businesses with high credit card receipts--such as retail, restaurant, and service providers that may not qualify for traditional loans because they have bad credit or little or no collateral.

Internet-only Businesses Must Be Strong
According to MCA forums, internet-based businesses can qualify for merchant cash advances as long as they meet some defining criteria. If the business stocks at least 80% of its inventory and has a generous cash flow, prospects are good. Also, the business type and overall transaction history is considered, as well. Unfortunately, these guidelines will exclude young businesses or ones with fluctuating performances.

The Doors are Opening
Vendorseek is lauding the creation of The North Merchant Cash Advance Association. This industry watchdog is bringing some regulation to a largely unregulated business. Apparently the NAMAA is doing a commendable job of advocating ethical behavior and proper legislation in the industry. This means more opportunity for you to take advantage of this dynamic source of business funding.