123ArticleOnline Logo
Welcome to 123ArticleOnline.com!
ALL >> Business >> View Article

Where To Get Money For A Growing Business

Profile Picture
By Author: Leon A. Elwell
Total Articles: 77
Comment this article
Facebook ShareTwitter ShareGoogle+ ShareTwitter Share

The following sequence of events is common to many new and expanding businesses.

The Short-Term Squeeze

You start your business with a limited amount of capital and an abundance of good ideas and ambition. The sales activity has been adequate to produce a net profit. Your inventory is about twice as large as you intended. Your accounts payable are past due to the point where some creditors want to ship C.O.D. only. To keep your creditors happy, you have been overdrawing your checking account to the dissatisfaction of your banker.
You have a short-term note past due at the bank.

These are all symptoms of a very common business ailment -too much short-term debt.

This type of cash squeeze can be avoided if you confine your company’s growth to that which can be handled from retained earnings. If thecash retained in the business from last year’s profits is $25,000 and inventory grows by twice that amount, somebody (you, your banker, or a new partner) has to fund the expansion that cannot be funded by the retained earnings.

Long-Term Funding

If you can’t provide additional capital and you don’t want a partner, you need to look for long-term funding from one of the following sources:

Funds from Owner- Studies indicate that as much as 60% of all small business funding comes directly from the owner or his/her immediate family. Outside of your immediate family or friends, you may find funding from other private parties or from financial institutions.

Private Lenders- There are some problems with outside private lenders. First, they are few and far between. Second, they generally demand a higher rate of interest and/or want to own a percentage of the business.

Financial Institutions- The main problem in using financial institutions for small businesses is that banks are not in the “risk” business. Although you may be very optimistic about your company’s future and have a glowing cash flow projection, the banker is not likely to rely on it for loan purposes. You may have adequate collateral in terms of inventory, real estate, etc., but if the banker feels that you will not have adequate after-tax net profits to service a loan, he/she is not likely to lend you money. Bankers do not want to liquidate your assets in satisfaction of their loan.

Small Business Administration- If financing is not otherwise available on reasonable terms, the Small Business Administration may be available to assist with its various loan programs.

Money Brokers- There are “money brokers” who advertise in various newspapers and business publications. Many of these brokers want to be paid in advance to locate possible lenders for you. Be very cautious of any broker and ask for references and credentials. Any proposal by such brokers should be reviewed by both your attorney and your accountant before you sign anything.

If you would like more information on the business funding options available in your situation, please feel free to call: https://www.bas-pc.com/contact-us/

More About the Author

Business Accounting Systems, P.C., is a South Jersey Public Accounting Firm located in West Deptford, New Jersey that has been providing excellence in servicing the accounting, payroll, and tax needs of independently owned small businesses throughout the Tri-State area. For More Info : Visit Here : https://www.bas-pc.com/

Total Views: 97Word Count: 479See All articles From Author

Add Comment

Business Articles

1. We Manufacture Latest Design Of Custom Perfume Boxes
Author: JamesAdam

2. Hiring Housekeeping Hoboken Services For Your Apartments
Author: Glow Up Clean

3. Your Purpose-driven Path: How To Reinvent And Re-energize Yourself With A Fulfilling, Joyful Purpos
Author: eWomen Network

4. Custom Cereal Boxes In Unconventional Ideas At Gotoboxes
Author: Mark Jackson

5. Things To Consider When Building A Waterfront Home | Commercial Construction Services
Author: Jrossi Construction

6. Custom Cbd Oil Packaging Boxes With High Quality Material
Author: lewismorgancbz

7. How To Perform Iso 13485 Training Requirements For (qms)
Author: Punyam Academy

8. Environment-friendly Disposal Solutions For Deepwater Dredged Material
Author: Millie Smith

9. Recent Developments That Will Change The Entire Face Of Networking
Author: Ronel Noel

10. Advantages Of A Commercial Agricultural Glass Greenhouse
Author: yang huimin

11. The Latest Mobiles In India Are Fun To Use
Author: Jakson Lee

12. Custom Popcorn Bags Uk Wholesale Discount At Gotoboxes
Author: Jordan Harry

13. Top Benefits From Hiring The Top Korean To English Translation Services
Author: LA Translation

14. How Translation Companies Help Different People
Author: LA Translation

15. What Is The Purpose Of Custom French Fries Boxes?
Author: Leo

Login To Account
Login Email:
Password:
Forgot Password?
New User?
Sign Up Newsletter
Email Address: