How New Businesses Can Get Funding
It can be frustrating for owners of new businesses to apply for funding to a bank and receive a denial almost right away. However, just because a bank didn’t approve your business funding request doesn’t mean other financial institutions will do the same. You just need to know where to look.
Reach Out to an Angel Investor
An angel investor is a person or company willing to invest in new businesses in exchange for part of the company’s equity. Even Yahoo and Google worked with angel investors when launching what were very new business concepts at the time. The average amount you can expect to receive from an angel investor ranges from $25,000 to $100,000, although some may go higher or lower depending on your needs and their own risk tolerance. As an entrepreneur, you should bring your business plan to a meeting with an angel investor and be prepared to expand on it in person.
Credit Unions or Small Community Banks
Large banks have a reputation for rejecting new businesses for funding. If this has happened to you or you prefer not to apply with a multiple-branch bank, consider going to a smaller community bank or a credit union instead. Not only do you stand a greater chance of approval, but these large bank alternatives are also much more likely to offer you a lower interest rate as well.
Sell Your Accounts Receivable Invoices
You can take advantage of the credit rating of your best customers by selling their unpaid invoices to a factoring company. The third-party organization provides you with immediate cash for the face value of your customer’s unpaid invoice, fewer fees charged. Factoring companies consider the credit of the company with an outstanding invoice and not your own company’s credit when deciding whether to approve the request. This is an advantage for new businesses that might not have much of a credit history yet.
Approved Business Lending would be happy to help you explore alternative business financing options. Please contact us today to request an appointment.