Startup Capital: Sources of New Business Funding

Sufficient startup capital is key to the success of a new business. Whether you borrow from family and friends for a small business with minimal startup costs or seek venture capital and business bank loans for a large organization, it’s important to have a plan to pay it back before starting the application process.

According to Frank Skelly of Factor King®, a New York based finance company, ”In today’s economy, it’s more important than ever for small businesses to manage their cash flow effectively to ensure their short term debt doesn’t outgrow their receivables. This includes having a comprehensive business plan that outlines how to manage their growth”.

There are many options available to businesses seeking a capital infusion to get off the ground. In this series of articles, we explore sources of new business capital and important considerations for each.

Sources of New Business Capital

• Traditional Bank Business Loans: Business loans from a lending institution are given as a lump sum to be paid back in regular installments including interest or as a line of credit to be used as needed.
• Venture Capital and Private Equity: Typically provided in early stage startup companies, private equity typically comes from an investment group interested in having ownership interest in exchange for the funds given.
• Factoring: A financial transaction whereby a business sells its accounts receivable to a third party at a discount, factoring often results in immediate cash to be used as needed.
• Government Programs: Through the Small Business Administration, some businesses can receive expanded access to capital through federally-funded programs that support high-growth startups.
• Loan from Friends or Relatives: A loan from family or friends, these loans are often paid back at a a reduced interest rate, interest-free or are in exchange for ownership interest in the business.

Stay tuned for next week’s article about traditional bank business loans in this series of posts dedicated to start-up capital!

Available Articles: Startup Capital: Small Business Bank Loans

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About FACTOR KING®
Did you know that Factor King® offers a quick and easy way to get cash for your business? Factor King is a direct financial service provider that specializes in the Factoring of invoice receivables for companies that maintain commercial accounts receivables. Simply put, the only criteria is that your receivables be from other businesses - no lengthy application process, no changes to your business operations, and no risks to personal relationships. Apply now to convert your company’s assets into immediate cash!