More Financing Options for Entrepreneurs & Small Biz

The recession has limited some entrepreneur’s ability to access cash for their operations.  Entrepreneur.com has a great take on the 5 ways to raise money in today’s business climate:

Seek a microloan. Small businesses with reasonably good credit have a fair shot at getting a small line–usually up to $50,000–from a microlender, even if they’ve been rejected by a traditional bank.

Use your assets. As banks have pulled back on lines of credit, asset-based lending has leapt forward. At First Business Capital Corp., you can secure a line of credit against eligible receivables in which the lender fronts you 85 percent of the total, then forwards the remaining 15 percent after your customer pays in full.

Turn to the web. For a small amount of working capital, try peer-to-peer networks, which marry lenders and borrowers online. Though it’s a relatively new concept, “over the next three to four years, peer-to-peer lending will take a significant leap in providing necessary capital to small-business owners,” says Steve Bloom, an advisor and the former chair at SCORE’s Atlanta chapter.

Go around the big banks. If you have good credit and a profitable business, research local banks to find a business-friendly lender that hasn’t been caught in the mortgage maelstrom.

Sweet-talk your vendors. Often overlooked as a source of credit, vendors are uniquely motivated to keep their customers’ business going and will often work out a payment structure to help clients survive a rocky period.

A few comments on some of the opportunity available to local entrepreneurs in the Valley County region.  First, microfinancing can be found here locally with our sales tax loan program (low interest loans) as well as microenterprise financing through REAP.  Gene Rahn, whom we’ve blogged on before.

Peer to peer (P2P) financing is a new phenomena and quite intriguing to me.  Call it the democratization of lending – a large pool of small scale financeers (plain people many times) pool their resources in a network (using technology) and loan out small fund amounts to individuals or businesses in need.  You can read more on P2P networks here and here.