Cash Flow, Growth Money, Business Funding Beyond the Banks
The number one reason for business failure in the U.S. today is lack of working capital!
Your Cash Flow Connection, the book, website and business, works with small businesses and that is who this book is dedicated to. So, though this statement about the number one reason for business failure applies to large and small businesses, alike, for our purposes here we will be discussing small business funding options, all of which can be used by big business, as well. Again, though, we will be talking about the small guys – my clients, the ones these tools discussed in this book have only recently become available to.
Back to the subject at hand, operating cash flow and financing the small business.
Businesses need money to grow. A business cannot survive just because it has a better product, an exclusive market or the best method of distribution. Small businesses are especially susceptible to the cash flow / growth money dilemma.
But where does a business go when the banks say no?
Asset-based lenders play a vital part in financing the economy and are dedicated to the growth and well-being of their clients. They provide their clients with cash by lending on fixed assets, accounts receivable and inventory, and engage in factoring, purchase order financing, real estate financing and leasing. They include the asset-based lending arms of domestic and foreign commercial banks, small and large independent finance companies, factoring organizations and financing subsidiaries of major industrial corporations.
The increased cash flows provided by asset-based lenders often makes the difference between profitable growth and failure for the under-capitalized small business. The flexibility and cash flow availability they provide have enabled countless companies to grow and take advantage of market opportunities.
Asset-based lenders most often provide small business financing when traditional sources are not available. They are familiar with various types of businesses and are responsive to the individual client needs. Whereas, traditional sources, such as banks, usually have a one-size-fits-all attitude.
These lenders - large and small alike - possess the experience and know-how to structure the proper financing a small business needs. They understand the ins and outs of the specific industry they deal with. They have made a point of learning the industry and they have also made a point of thinking "outside the box" to accommodate the industry's special needs.
Asset-based lending has always been available to "big business" but is just recently becoming utilized by small businesses. The business world has begun to realize that the total of "small business" is larger than "big business" and is beginning to work hard to make small businesses aware of these funding options.
Some banks are actually beginning to send clients they reject to asset-based lenders. They have decided it is in their best interest to refer their business to someone who can help the client. Then, when the client grows to the point where he is bankable, they feel he will be inclined to stay with them and borrow from them.
When evaluating an asset-based loan, borrowers should consider the cost of financing in the context of the benefits to be received rather than on the stand-alone basis. Compared with other financing alternatives, asset-based lending is very cost effective and efficient and is there "when" you need it to take advantage of profit opportunities in the market.
Asset-based lenders are also responsive to the urgency of a business’ cash flow needs.
If your small business is experiencing cash flow issues, why don’t you check out the book and then give me a call. I offer free, no-obligation consultations.
About D. L. Benton
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Published April 13, 2013
Business & Economics, Professional & Technical.