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Non-Bank Funding Options for Startup Businesses

non-bank funding military awardsA small businessman in Trenton New Jersey recently started a new venture. With years of experience in military technology, he created a line of crutches explicitly designed for injured war veterans. After getting his concept off the ground and creating a prototype, he was able to land a large client. This client was working directly with the government and wanted to place on-going, substantial orders of this product, to supply to the government, and in turn to the veterans.

Startup Business Often Can Not Get Bank Loans

While this was fantastic news for the startup business, it also requires the company to invest in outsourcing the manufacturing of the product. Such investment is at the cost of over $700,000. Even though the business was getting this order from a very reputable company, as a startup business, they were not able to get anywhere near the amount of money they needed to complete this order from a traditional bank loan. Generally, in a bank loan, banks are looking for high-end collateral or personal guarantees. This is especially true for a startup business. Also, this company was not able to offer either.

This is not a unique situation for a startup business, in need of cash to fill an order but unable to get the help they need from the bank. Without having the funds they need to complete their orders, they can not collect the payment and can hit a wall. To make matters even more challenging, typically payment can take 30-60 days to receive. That is why this business turned to a factoring company, and they were able to offer them a $700,000 invoice factoring line of credit.

Invoice Factoring Get Startups Working Capital

With the help from the factoring company, this business was able to fill the order, manufacture and distribute the crutches to their client. Additionally, such business will continue to grow and prosper. In today’s economic client, where banks are less and less willing to extend financing, factoring companies. As such as, these are a true solution to many startup businesses needs. Without this option, this entrepreneur would not have been able to continue and grow his business successfully.

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