Avoid 4 Mistakes Financing Your Business

Avoid These 4 Common Mistakes Financing Your Business

Every business owner knows it takes money to make money.  While a business owner is adding employees and renting additional space to take on larger contracts it’s crucial that financing for this growth is already in place.  Financing and cash flow issues is one of the top reasons that business fail with in their first 5 years.  With so many small business financing options to chose from, it’s not always easy to find the right financing for your business. 

When looking for additional capital watch out for these common mistakes that can hamper your growth, or even worse.

  1. Looking for too much or too little financing. It can be tempting to take on as much money as a lender will provide.  Borrowing more than you need means high payments that will eat into your profits and could ruin your personal and company credit.  Likewise, borrowing too little will leave you cash strapped right when payroll or suppliers must be paid.
  2. Mis-matching your financing. Not all financing types are equal.  Long-term financing should be pursued for expensive machinery or a building.  Short-term financing is a fit for day to day working capital needs.
  3. Taking on unworkable repayment terms.  Financing should improve your business, not become a drain on your cash-flow.  Desperate business owners who accept excessive terms and conditions regret their decision as they watch their profits and cash drain out their account.  Always fully understand the costs and conditions of every financing agreement.
  4. Not weighing all your options.  Sometimes the best financing does not come from the bank.  This especially true for a start-up or a rapidly growing company.  Start-ups often turn to friends and family to find the financing they need to get the doors open.  Alternative lenders, like invoice factoring companies offer a great solution for growing companies.

American Receivable is a 43 year old invoice factoring company. ARC remains owned and operated by the original founders.  Prospects never pay an application fee and are qualified on the credit strength of their customers, not their credit. Unlike bank owned factoring companies that makes their decision based on your personal credit score and then sets a credit limit on your business.    American Receivable’s longevity is based on our client’s success. 

Schedule a conversation to learn more how American Receivable will provide the cash you need to thrive.

Schedule a time to chat:   https://americanreceivable.com/schedule-an-appointment/

Jack Stieber | jack@americanreceivable.com | 1-800-297-6652

Brad Gurney | brad@americanreceivable.com  | 972-404-4726


Share on facebook
Share on twitter
Share on linkedin

More Posts

The History of Factoring

The History Of Factoring

The need for financing to facilitate commerce created factoring.  First found in the Mesopotamian culture, the laws of factoring are lined out the Code of

Warning Signs of Predatory Lending

Four Warning Signs of Predatory Lending

As many small businesses are recovering from the pandemic, scammers and predatory lenders are taking advantage of businesses searching for funding.  As the Paycheck Protection