If you’re looking to secure the capital you need to grow your business, customer financing may be the route for you. Most people will only finance products or services if they think they’re worth the investment. Make sure your products or services are priced fairly so that people believe they’re getting good value for their money. You can also make your products or services more affordable by offering free shipping or discounts on larger orders. When deciding which type of customer financing to pursue, it’s important to consider your business’s needs and goals. Your business may need a small amount of money for working capital or for purchasing inventory, while another business might need more money to expand its operations or purchase new equipment.

Small Business Customer Financing

When the traditional banks say no, we talk to you about your business. It’s why we’re trusted by over 30,000 businesses in over 325 industries. Borrowing more than enough capital can often be just as stressful as not having enough. We have loan programs made to help you succeed and grow into the future. This short-term, specific loan handles your equipment repair, replacement, or purchase.

Payment Processing

If you’ve been hanging around the startup crowd for any length of time, you’ve likely heard the term “angels”. Angel investors are people who have the means to invest in a business opportunity that interests them. They are generally wealthy and will research opportunities in depth before jumping in. They might even spot the potential to join a business before it ever gets off the ground.

  • This assumption of risk gives lenders an incentive to extend you a generous terms, far better than what you’d get from a regular term loan.
  • In a way, grants are as close to “free money” as most entrepreneurs get.
  • And just like a credit card, once you repay, you can borrow again up to your credit limit.
  • If you wish to consider this avenue, there are some items you might want to think through first.

Most VCs prefer to support existing small businesses as opposed to startups. If they find proof of potential and scalability, they come on board not only with money but with expertise, mentorship and a lot of guidance. They tend to stay with the business till it’s either acquired by someone or till it goes public. The only possible downsides are that they exercise control and there is a lot of accountability towards the VCs.

Finance options for small businesses just starting out

Factoring is not suitable for companies with a few customers only because factoring companies want to spread their customer risk as widely as possible. These companies may also require long contracts of two years or more because of the risks involved. They also charge a higher fee than invoice financing due to the added risk of collecting from your customers. Factoring companies may also be perceived by customers as a sign that your business isn’t doing well, and your customers may resent having to deal with a third party. You pay a fee of 1%-3% per month for the convenience and are still responsible for collecting payment from your customers.

Scooter Financing

Perhaps the best creative/alternative form of money for your new business is equity crowdfunding. Charge cards often do not have a spending limit, and thus allow the entrepreneur or business owner great flexibility. However, they should be used with the same careful discretion as credit cards. That’s why when raising capital, you should generally start with the first categories, and then work your way up to the harder ones. Conversely, debt capital is the term used to describe the capital that is given to a company in return for the company’s promise to repay the capital over time with a fixed or variable interest rate. Speaking of cash flow, getting paid quickly can enable you to take advantage of great offers on capital investments before your competitors snap them up.