Get Startup Business Funding: Invoice Factoring and More Solutions

Looking to raise money for your startup?

Raising money is the hardest challenge many entrepreneurs face. Most entrepreneurs make numerous pitches before an someone agrees to invest in your startup.

Of course, you have to have a solid business plan. Are your financial statements correct? Do you have a strong management team? How long before your business is making money?

After answering these questions, you can start looking for your startup capital. Here are few of your options:

Bootstrapping. Bootstrapping is the self-funding of your business. You’re starting your company with just money and equipment you have. This is often an entrepreneurs first choice since they keep full control of their company without going into debt. Some business ideas are more complex requiring outside money to bring the idea to fruition.

Friends and Family. Whether the money is donated as a gift, a loan or as an investor, friends and family are usually the entrepreneurs first option after bootstrapping. Be sure to have a clear written agreement detailing the amount, any interest, and possible repayment options.

Business Loans. Business loans are the debt based funding route. Angel investors and venture capitalists will take losses, but banks do not. Both bank loans and SBA loans will require a personal guarantee. They can be difficult to find with our several years of profitable operating history.

Invoice Factoring. Entrepreneurs turn to a factoring company to sell their accounts receivable for immediate cash, speeding up their cash flow. Many startups that managed to bootstrap successfully will take advantage of invoice factoring to take on larger projects without going into debt. The factoring company will also benefit the entrepreneur by reducing their credit exposure to slow paying customers and even bankruptcy.

Crowdfunding. Crowdfunding is the pooling of money. The startup will trade equity or product for a contribution or donation. This can help pay for the cost of a specific project or expansion. By offering rewards or product in exchange for you maintain your equity. Kickstarter, Indiegogo, and Fundable are a few examples.

Angel Investors. Angel investors are wealthy investors who provide startup capital in exchange for a percentage of ownership in the company. Angels may also take on an advisory role with the company, so it’s important to find an angel investor with a background in your industry. The angel investor may be an individual or a group of investors. The Angel Capital Association has a registry of accredited investors.

Credit Card. Many entrepreneurs will use a combination of personal credit cards to stretch out their startup capital. These credit cards will often have high interest rates so you will want to pay the balance off as soon as possible.

There are numerous options to consider for startup funding. Many successful companies have used a combination of these options during their life span. Remember, by choosing to use invoice factoring you have instant access to the cash locked up in your accounts receivable, and you do not create any debt that has to be repaid. To learn more about the benefits of factoring contact American Receivable today.