Small Business Financing: Where to Find Working Capital

By Susan M. Keenan for GoldAllianceGroup.com

Small business financing provides the working capital that is needed not only for starting up, but also, for maintaining the ongoing operations of any business. Financial backing, which can be found from a  variety of sources, is accessible from micro loans to large sums of money. A number of funding options are available to both new and established business owners.

Business Capital Search Engines and Small Business Financing

Business capital search engines are useful tools when it comes to locating a variety of financing options for small businesses. Of course, they can also be used to locate funds for any size venture. One of the benefits of using a business capital search engine to find business financing is the amount of time and frustration that it can save. Another benefit is that the search results provide more than one option for consideration, allowing the borrower to have flexibility in his decision making process.

Using this type of search engine is easy and relatively quick. Of course, you'll need to input a few specifics to get started, so think about what your expectations are for your business before you start. You'll need to know how much you want to borrow, separated into total amount needed and working capital.

Additional information that you'll need includes answers to the following type of questions. Are you buying a business? Are you buying a franchise? Do you need funding for equipment? If so, what type of equipment? Are you buying real estate? What is its current market value? How much do you want to borrow for the purchase of the real estate? Of course, different business capital search engines might word their questions differently or request additional types of information, but this is the generalized idea of what you can expect.  Start your search at Search.Business.gov .

Small Business Loans

Certain types of small businesses can access equity loans to finance their enterprise. The lenders use the equity held in the business property including land, equipment, and products to secure the small business loan. In fact, shares in the company can also be used to secure a business equity loan. Companies that fall into this category would include businesses with a great potential for growth. The lender recognizes the promise of success and is more than willing to accommodate the needs of the business owner in exchange for some type of security.

Funding Startups

Small business start ups can generally take advantage of something known as micro business loans. A smaller type of loan, generally between $5,000 and $35,000, the micro loan offers new enterprises an opportunity to locate financing that is affordable. Provided by non-profit community lenders, micro loans are short-term loans having terms of six years or less. This is a perfect timeframe for start ups since the first five years are critical in establishing a successful venture. The micro business loans allow the small business entrepreneur a chance to focus on his daily operations without the need to worry about working capital.

The Small Business Administration is often behind this type of small business loan so they are sometimes referred to as SBA loans. Although each lender has a set of requirements for their small business loan borrowers, specialized training and planning details for the enterprise must be completed prior to the dispersal of the loan. This strategy further ensures the success of the enterprise by offering a bit of business savvy that helps to get the owner of the start up on his feet from the very beginning.

Alternatives to SBA-backed Loans: Options in Small Business Financing

A number of alternatives to Small Business Administration backed loans (SBA loans) are available to those who either don't qualify for this type of loan or who simply prefer to try something else. Credit card receipt advances, a relative newcomer to business financing, provides an immediate source of cash revenue that can be used either to start up a small business venture or to help out with everyday operations.

Credit Card Receipt Advances - with this method the lender exchanges the money for future credit card receipts. This practice is also referred to as a cash advance or merchant advance. One of the benefits to this type of financing is that even individuals with no credit or bad credit can obtain it. Any small business owner who brings in a minimum monthly sales figure of $2,500 can qualify to receive as much as $100,000. Of course, this amount varies according to the actual sales produced by the business. Fees apply, but it may be worth the ability to access needed cash.

Factoring - Another option that does not involve any type of traditional loan or credit is the selling of accounts receivable. The accounts receivable of any business are one of its most valuable assets. This is an excellent way to finance your business since you do not accumulate additional debt. Selling accounts receivable invoices provides ready cash in the present even though the payment hasn't yet been collected.

Small business credit cards also provide ready buying power along with a great deal of flexibility since these cards can be utilized in a number of ways. Small business owners can track their employee purchases to ensure that everything is on the up and up. Plus, small business credit cards can be used to pay off debts to vendors or reduce the direct outlay of cash. In fact, the responsible use of small business credit cards will improve the credit rating of the individual and business, offering a better chance at obtaining a business loan in the future.