Finding Funding in Non-traditional Resources

By Charles White

Money is something that keeps businesses going through good times and bad. Having access to money and earning more, proves a business is worthwhile. But what if you are not able to get money? As what happened during the financial crisis of 2008, money for many small businesses, be it loans or lines of credit, was in short supply. It’s sad to say, but many businesses even closed down for lack of money or knowing how to access more of it. In my years of helping businesses, the following are some of the most effective ways that I have found to get money. This means you don’t have to apply for a bank loan or plead with your friends, family or distant relatives for a handout.


The first method of alternative financing is called “factoring.” Factoring is defined as selling your invoices to a finance company in return for money. Usually the finance company will give 75 – 80 % of the outstanding balance. Once the finance company collects from your customer, it will give you an additional 10% – 15% of the outstanding balance. This type of finance is good for many types of industries i.e, clothing, employment, etc. The expediency of the financing is what’s favorable and you will receive your money within 48 – 72 hours. Because there are so many types of factors, it is best to call around or look in the yellow pages for a factor.

Another type of financing is called “asset based lending”. What asset based lending means is that a finance company will give you cash based on the value of the assets of the company. The assets can be land, furniture, cars, art work etc. The upside is that the financing can be done quickly, however the downside is that lenders will usually give you only percentage of what the asset is worth. This could mean finance from 20% – 90% will be given as loan. Again, talk with multiple lenders if you have a need for quick cash. Interest rates tend to be kind of high, but if you need the cash, it is an alternative.

 As with asset based financing, customer financing can be alternative to going to a lender seeking a traditional bank loan. How customer based financing works is that you are using the customers money to temporarily fund your business. This can be done by preselling goods or services ahead of time to your customer, having your customers sign a long term contract and selling the contract to perform to a finance company or by just requesting a loan from your customers. You will have to be creative, but when you have customers who are willing to buy, there is always a way to get cash for your business.

 Similar to customer financing is “vendor financing.” Vendor financing is defined as going to the vendor from who you buy supplies and asking for a loan. Many companies and industries do this because they know that there products sell well and they know that many companies go through seasonal upturns and downturns. Some banks don’t like upturns and downturns, so it’s easier to finance from a vendor. Think of the auto industry or big government contracts. All businesses are different and each will have to talk with their vendors to see if it is viable. Did you know that companies like UPS provide vendor financing to their customers?

 As with vendor financing, many state, county, city and other government agencies will actually fund a company to help them conduct business. Why you may ask? Many times they will do this to help the local community or it might be in the best interest of the government for that contractor not to apply for a bank loan. There are several types of funding within the government agencies and you will have to network to hunt them down. Here is a quick story about how the government can help. One of my customers had a spotty credit record and no bank would take the risk with loaning his business money. He found out about a construction services contract and he believed he could do the work. He approached the city government and told them what he wanted to do. The city government vouched for him for the contract. He was able to then approach a factor who would finance the invoices to the city. With this financing in place, he was able to grow his business to $1 Million dollars within 8 months.

Remember, when you are in business, you have to be creative. Not only creative on the business side, but also when financing the business. Always know that there is a way to get the money you need to keep the business going.


About the Author: Charles White is the owner of AAA Data Information. He has previously worked at IBM, MCI (WorldCom), Pagenet of America and AT&T. He has helped small businesses obtain wealth for over 15 years. He presently resides in Portland, Oregon. He can be reached at info@aaadatainformation.com

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