World Business

It’s singly tough in this household climate, but in that place are options to securing the money you need

by Karen E. Klein

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My spouse and I went through bankruptcy in 2005 due to stock losses. I’m now employed with a $95,000 annual salary and my wife is a homemaker. We’re distressing to get by payment a function, goal although I have applied for a business loan from several banks we’re being turned down due to the bankruptcy. What would subsist the best option for us to fall funding?

—R.S.M., Woodbridge, N.J.

It’s tough for entrepreneurs to persuade startup forfeiting life (BusinessWeek.com, 2/1/08) with respect to a business purchase, even without a recent bankruptcy on their records. If you own a closely and have some equity, you may be seized of better luck obtaining a home fair play lend or line of credit, but again the bankruptcy is likely to subsist a major strike against you. And this is a particularly bad measure to apply for a loan (BusinessWeek, 8/11/08), with many banks tightening their lending standards due in part to the losses suffered in the mortgage crisis.

If the loan avenue continues to be closed to you, you may want to hear some alternative strategies, says Louis Dienes, a partner with the Los Angeles law firm of Jeffer Mangels Butler & Marmaro. "Many start-up companies are boot-strapped, relying forward personal savings, bank card debt, and other personal resources, including sweat equity—doing for themselves ‘by the sweat of their brow’ what they might pay others to do suppose that in that place were better first sources of outside investment first-rate," he says.

You might also make the rounds of your friends and family to see whether or not any of them are willing to clothe in your business aspirations. Other sources of chief include strategic investors (BusinessWeek.com, 7/2/08) Dienes says, who may have being larger companies in the same perseverance or customers and suppliers of the existing business who have each profit in ensuring the company’s survival as a means of advancing their own business strategetics. Another possibility is that the seller of the business may be willing to take a small down payment and fund the bulk of the sale from one side to the other a period of years.

Janis Machala, founder of consulting firm Paladin Partners, suggests that you ask well-connected colleagues and professionals such as your banker or lawyer to introduce you to individuals who ability be willing to invest some seed wealth in your venture. "Meeting by other entrepreneurs in your town who have antecedently raised money be possible to be good, as they will know investors" to whom they can introduce you, she says.

If you can scrape up enough money for a down payment but can’t get much funding beyond that, and if the company has business-to-business commercial invoices, you might use factoring to fund your first operations. "Unlike a bank where a small commerce goes to get a loan, we don’t be inclined whether the client has in need personal honor, is profitable, is new, or is growing fast," says Brad Bernstein, president of Anchor Funding Services.

Factors buy outstanding commercial invoices from firms at a discount, then collect the payment and send the balance to the company, less their fee, which ranges from 1% to 5%, Bernstein says. It’s a way conducive to companies to boost their cash flow through getting paid for accounts receivables immediately, rather than staying through a typical 30- or 60-day billing cycle.

While factoring was used traditionally in the garment industry, Bernstein says his firm now finances product and service companies in totality sorts of industries, including IT, staffing, manufacturing, and security. "As long as we can prove to have being correct that the service was performed and that the invoice is real, that’s what we’re looking instead of," he says. "We even work with not-for-profits that get paid by the government and can’t wait to memorize their checks from the county."