Instead of VC - Alternate Ways to Finance your Startup
May 6 2008 | 1 comment(s)
If you are tired of bootstrapping your firm, an equity investment by a VC might not always be the best option for you. With the average cost of starting a business in the area of $70,000, entrepreneurs should also look at alternate ways of financing.
In the current economic climate, it is certainly more difficult to get a loan, particularly if you don't have a lot of assets to use as collateral. Instead of the easy route of a home-equity loan or a more traditional small business loan, The Wall Street Journal published an interesting article about three places to look instead:
- Credit-Union Matchmaker - these can sometimes be used if you don't need a lot of money and can't put up any collateral. It can also be a decent option if you have a fixed amount of time that you know you will need the money for.
- Credit Lines - If you have assets and need a credit line say to buy more goods the next company secured a revolving credit lines are secured with accounts receivable and inventory. The Wall Street Journal cited a specific deal with Siemens First Capital Commercial Finance LLC where the limit was capped at 85% of its accounts receivable and 60% of inventory, combined. The new credit line requires additional administration since the firm must submit monthly reports on accounts receivable and inventory to recalculate the borrowing limit.
- Government-Funded Nonprofit - If your company is a startup and you plan to create jobs in a specific region you can look for a local Economic Development Group, such as London's LDA. If you are willing to file reports and use money towards dedicated projects, this might be the way to get loans with reasonable rates or sometimes even grants.
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Comments
May 7 2008 03:29AM by dax
SBA Loans for Startup Business is your way to success!
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