Alternative Sources of Operating Capital for Businesses

Sources of Operating Capital

If you have looked for Operating Capital to expand your business or maintain your operation until you can qualify for Bank Financing, you may want to look into some of the alternative forms of financing. There are many more than those listed here, but these are a good start.

The following table shows some information about the Major Sources of Capital such as: 1.)Type of Cashflow, 2.)Cost of Money, 3.)The Application Process, 4.)Potential of Growth with each type, 5.)Loss of Control (or not) of your company, 6.)Importance of Your Personal or Business Credit, 7.)Whether or not a Personal Guarantee is required, 8.)Which (if any) Liens are created, 9.)Whether Debt is incurred on the Balance Sheet and 10.)Whether they may be used along With Other forms of Financing.

Cash Sources	Cashflow	Cost of money	Application Process	Growth Potential	Loss of Control	Bus./Pers. Credit	Personal Guarantee	Liens	Incur Debt	w/ Other Financing
Wall Street (IPO)	Ongoing	Inexpensive	6 to 18 Months	Unlimited	Some	Unimportant	None	None	N/A	Yes
Commercial Loans	One Time	Fairly Inexpensive	1 to 3 Months	Limited	No Loss	Very Important	Usually	Yes, Everything	Yes	Usually Not
Asset-Based Loans	Ongoing	Fairly Inexpensive	1 to 4 Weeks	Unlimited	No Loss	Important	Often	Yes Varies	Yes	Yes
Factoring Receivables	Ongoing	Expensive	1 to 3 Weeks	Unlimited	No Loss	Unimportant	Not Usually	Receivables	No	Yes
T.A.D.'s *	Ongoing	Competetive	48 to 72 hrs.	Unlimited	No Loss	Unimportant	None	None	No	Yes
Equipment Financing	One Time per Lease	Moderate	1 to 4 Weeks	Nearly Unlimited	No Loss	Somewhat Important	Not Usually	Equipment	No	Yes
Sale Leaseback	One Time	Moderate	1 to 4 Weeks	Limited	No Loss	Somewhat Important	Not Usually	Equipment	No	Yes
Using CreditCards	Ongoing	Expensive	1 to 4 Months	Very Limited	No Loss	Important	Always	None	Yes	Yes
Accepting CreditCards	Ongoing	Expensive	2 to 10 Weeks	Unlimited	No Loss	Unimportant	None	None	No	Yes
Selling Installments**	Ongoing	Moderate	2 to 4 Weeks	Unlimited	No Loss	Important	None	None	No	Yes
S elling * Bad Debt**	Occasional	N/A	1 to 4 Weeks	Limited	No Loss	Unimportant	None	None	No	Yes
Bridge Financing	One Time	Very Expensive	5 to 10 Days	Limited	Often	Important	Always	Yes	Yes	Usually
Venture Capital	Varies	Very Expensive	3 to 60 Months	Varies	Almost Always	Important	Usually	Often	Yes	Usually
Mergers & Acquisitions	Ongoing	Use Other Peoples $	2 to 12 Months	Can Be Unlimited	Very Often	Unimportant	None	N/A	N/A	Yes
P/O Funding	As Needed	Very Expensive	1 to 4 Weeks	Unlimited	No Loss	Sometimes Important	Often	Often	Yes	Yes

* Term Allowance Drafts **Consumer Installment Contracts ***After Collection

These are some of the sources of Operating Capital or Financing for companies to keep their doors open and/or to grow and expand.

E-mail us at rdfoster@worldnet.att.net

Return to Home Page