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Term loans are the most common form of business loan. You borrow a fixed amount of money and pay the loan back over a fixed term, often with a fixed interest rate. Organizations:
- Washington State Department of Commerce - Helps entrepreneurs obtains financing for start-up and expansion projects.
- Small Business Administration - The U.S. Small Business Administration delivers loans, loan guarantees, contracts, counseling sessions and other forms of assistance to small businesses.
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Asset based loans are based on the collateral (accounts receivable and inventory) that a business has to secure a loan. This makes asset-backed loans more suitable for businesses with lower credit scores. Resources:
If your business produces products and has inventory, an inventory loan may be available to you. Inventory financing allows you to secure your loan with inventory your business produces. Resources:
- Financing your business with your inventory http://bizfinance.about.com/od/accountingandcash/a/inventory_fin.htm
- Inventory based loans: How one company deals with a cash flow problem http://www.entrepreneur.com/article/42328
Equipment loans offered by lenders allow you to finance up to 100% of the value of machinery, vehicles or other equipment your business may need. The financing company typically pays the equipment maker directly, and then you repay the financing company. Resources:
Purchase order financing is a loan for businesses that need cash to fill single or multiple customer orders. Purchase-order financing provides short-term capital to cover the cost of manufacturing and shipping hard goods. Resources:
Companies facing cash-flow problems and slow-paying customers may sell their invoices or accounts receivable to specialized companies called factors. The factor company advances most of the invoice amount (70-90%), after checking out the credit-worthiness of the billed customer. When the invoices are paid, the factor remits the balance, minus a transaction (or factoring) fee. Resources:
The Small Business Administration's Microloan program provides loans up to $50,000 to help small businesses. The average microloan is about $13,000.
Crowdfunding is a relatively new option. It involves financing a business venture by raising cash contributions from many individuals, typically through the internet. Resources:
- What is crowdfunding?
http://crowdfundingblog.com/what-is-crowdfunding-guide/
- Crowdfunding in Washington State
A Merchant Cash Advance is a type of funding where the Merchant Cash Provider purchases a fixed dollar amount of a business's future credit and debit card receivables. No regular fixed payments are required by the company. The lender collects a set percentage of the company's daily credit/debit card sales. The collection continues until the lender recovers what they advanced to the company along with their premium. Resources:
Peer-to-peer-lending (P2P) involves sharing your idea to other people in hopes they will invest in your business. Websites connect people who want to lend money with those who need to borrow money - often in increments as low as $25. You determine how much you need to borrow, define the purpose of the loan, and post your listing online. Resources: