Avoid The Sharks

If you started your own business, you’ve already entered the pool. The entrepreneurial spirit is what drives the global economy, and small businesses are the backbone of this country. According to the Small Business Association (SBA), small businesses account for much of the job growth in the U.S., employing about half of all workers.[1]

If you’ve already made it to your third year or beyond, congratulations are in order. Sixty percent of new businesses fail within the first 36 months, and only 35% survive to year 10. One reason start-ups fail is lack of sufficient working capital. Today more than ever, access to capital is a challenge for small and mid-sized businesses.[2] Banks – even SBA-backed banks who should be lending in this space – are denying up to 87% of loan requests from small to mid-sized business owners. At the same time, banks are making it more difficult to apply with complicated paperwork that, according to records from the Federal Reserve, can take up to 25 hours to complete.[3]

As a result, some firms are looking to Venture Capital groups (VC) to meet funding needs. While venture capitalists can be a vital source of financing, they can also take a bite out of your company. That cash infusion may provide an immediate boost, depending on the needs of your enterprise, but it often comes at a high price. VC firms are looking for a good return on their capital, so they often request large equity positions in exchange for their investment. They may even require representation on your company’s board, or a seat at the C-level table.[4] The funds will help you reach your goals more quickly, but you risk losing control in setting the direction for your business. On top of that, 25–30% of VC funded businesses fail—primarily due to the lack of innovative problem solving and discipline that comes from “bootstrapping” your business on your own.[5]

More business (and bottom line) friendly resources, that allow you to keep the bootstraps in your hands, are Alternative Financing Products. Provided through specialty financial services firms such as ExpoCredit, alternative financing options are asset-based. Their product solutions let you leverage customer invoices, unsold inventory, purchase orders and other business assets in exchange for ready working capital. You are always in control, and since they are not loans—or a typical investment—you are not holding debt on your books, or surrendering a piece of your business.

The application processes are simpler, and the approval times shorter. In most instances, you can have the cash in hand within days of initiating the application. You can even handle the paperwork electronically and online. Unlike VC and banks, with ExpoCredit, there are no restrictions on the use of the funds, and there is no “reporting” or accounting for where or how the money was applied towards your business goals. There are enough challenges for business owners. Why let access to growth capital block your pathway to success.

For more details, or to apply online, visit www.expocredit.com

[1] https://mashable.com/2014/01/30/startup-success-infographic/
[2] https://www.entrepreneur.com/article/79254
[3] https://www.forbes.com/sites/hbsworkingknowledge/2014/08/04/why-small-business-lending-has-not-recovered/
[4] https://www.investopedia.com/exam-guide/cfa-level-1/alternative-investments/venture-capital-investing-stages.asp
[5] https://online.wsj.com/news/articles/SB10000872396390443720204578004980476429190