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How to Pay Back a Loan to Start a Business


How to Pay Back a Loan to Start a Business

You don’t need to have a high IQ to know that starting a business requires a lot of money. So unless you have a lot of money from saving, or maybe you inherit a huge sum, having money to start a business is not that easy. Many people opt for a loan to start their business. However, this is a big decision that can result in a disaster if you are not careful.

 If you need to take a loan, then follow these steps to make sure you can repay it while making the most out of your business at that time. 

 Tips to pay a loan for your business

The key here is budgeting. If you are taking a loan you need to create a budget for the business. This is the best way to keep an eye on your income and your expenses to have a control on how you are doing every month and take actions if your numbers are getting close to the red. 

 We often said that we need to be realistic when it comes to having a business. But if you have a loan to pay, you need to be more careful and realistic than ever. You need to pay your loan without sacrificing having a cash flow to operate your business. Paying your loan while not having enough cash might put you on the track to fail. 

The most important thing you need to do when setting up your goals is to make sure you are making constant payments to the financial institution where you requested the loan and make sure to pay on time, in this way you will avoid any late fees and penalties that can affect your cash flow even more. If you want to make sure you never miss a payment date, set automatic payments near the date, so you don’t have to be worried about manually making the payment. 

Struggles with loans

 If you are having problems when applying for a loan, you are not alone. This is a crucial step that is complicated depending on the situation you and your business might be in. 

One of the things you can do if you are having problems when applying for a loan is getting a cosigner. If they have a better credit score as you and agree to be responsible for the loan, your chances of success will be higher. 

One of the biggest issues any business owner can face are difficulties to make monthly payments when things are going slow. In these cases, the best thing you can do is refinance your loan. This will help you get a new loan with more favorable terms and conditions that might include a longer repayment time or a better interest rate.

Also, consider that setbacks are always bound to happen and this will affect the possibility of paying your monthly fees. When this happens, the worst thing you can do is panic. Take a deep breath, make a small plan and get back on track as soon as possible.

Consider getting some assistance from a financial advisor that can help you set a budget aligned with realistic goals to be able to get out of the turmoil as clean as possible. If you want to learn more about loans, browse this site.


Paying back a loan to start a business can be a challenge, but it’s important to remember that it’s an investment in your future. These tips are a way to increase your chances of repaying your loan without any incidents.

Remember, it takes time to repay a loan and it’s a matter of taking small steps and always moving forward. Don’t get discouraged if you don’t see results immediately, enjoy the ride.



In Tough Times For The Unemployed, Franchising Might Be Their Answer

With millions unemployed and numerous industries struggling due to the coronavirus pandemic, some people who are out of work are considering a new career.

As positions dwindle in the fields they are familiar with, people are finding themselves forced to go outside their area of experience. And for some, that Plan B could be a blessing in disguise.

Owning a franchise has gained popularity in recent years, even in times of economic prosperity, as individuals have looked for a “second act” in their professional life. Franchise sales often do well in a down economy because unemployed people are tired of the lack of control they have in a corporate setting and are ready to become their own boss. Of course, there are also the additional dangled carrots of potentially more income and freedom.

In my world of franchising, pest control, we are seeing some people who have been furloughed in other industries becoming interested in being franchisees. The restaurant, hotel, oil and gas, and airline industries have been hit particularly hard in this COVID-19-caused recession. Some jobs in these and other fields may not be coming back.

But the good news is that many of the people whose jobs have been eliminated or reduced have the skills associated with running a franchise successfully. Those skills span the spectrum from leadership to business experience, discipline, technology knowledge, and communications. For many of these displaced professionals, franchise ownership may be a natural fit.

Becoming a successful franchisee takes hard work and some up-front money. Getting business loans can be tough in today’s economy. Franchise ownership is more attractive to those with a nest egg or a nice severance package that affords them the flexibility to purchase a franchise. It’s also important to note that “freedom” is a relative word when owning a franchise; in addition to long hours while getting the business established, remember that it was somebody else’s business idea, and you have to follow the script of operating the franchise.

But more and more, franchising is something out-of-work individuals with money to risk and a desire to run their own business want to consider. It requires a lot of research and intense due diligence before signing on the franchisee line. Facing life after a layoff and looking for your next move, it’s vital to do your due diligence when investigating a franchise opportunity and to clearly understand what your role will be as a franchisee.

Some of the top benefits of owning a franchise:

Experience is optional. How many times have you seen a job posting that interested you, but the experience required didn’t match up with your work history? You don’t have to worry about that as a franchisee. The franchisor provides the training to help you gain the skills to operate the franchise. A major part of what makes a franchise successful is an easily replicable system.

Minimal startup work. One of the most difficult parts of owning a business comes in the startup stage, which involves, among other tasks, writing a business plan and doing market research. But buying a franchise allows you to skip this often painful stage and hit the ground running. The template is in place, the market research for the region has been done, and the business model is well established.

Risk reduction. When someone decides to buy a franchise, rather than start a business from scratch, they have reduced their risk of failure. For one thing, consumers are already aware of the brand name, and that awareness puts the franchisee ahead of the game. The product and the system have been tested and shown to work, and the franchisee’s access to corporate guidance is a big asset in growing their franchise.

Additional support. Along with training and ongoing advice received from the franchisor, franchisees can get support from other franchisees in the company’s network. Additionally, the company itself does marketing and advertising on a wide scale that by association helps promote the franchisees’ locations.

Help in negotiating operating costs. Typically, someone starting a new business as an independent owner is out there alone trying to negotiate prices for items to get their business off the ground. But as a franchisee, often the franchisor already has relationships with vendors, giving franchisees the ability to purchase goods at discounted prices.

If you’re a displaced worker or executive, the franchise industry may be the opportunity you’ve been looking for. It could make life after the layoff better than you imagined.


Chris Buitron is CEO and president of Mosquito Authority® (, a nationwide leader in mosquito control with franchises serving communities across the U.S. and Canada. Buitron has an extensive background in franchise industries. He was chief marketing officer for Senior Helpers, vice president of marketing for Direct Energy (home services division), and director of marketing for Sunoco Inc., where he supported the company’s 4,700 franchised and company-owned rental facilities across 23 states (over $15B in annual revenues).


Why Buying a Small Business Now is a Bad Idea

Normally, I am a proponent of buying small businesses.

The data shows they make the world go round. The U.S. Small Business Administration Office of Advocacy, which defines a small business as a firm with fewer than 500 employees, states there are over 30 million such enterprises in the U.S.

But a convergence of factors has made the economic environment less favorable to small businesses, and I would hold off on buying one at the present time. Here are a few reasons why:

Volatility. Change is everywhere. Along with the disruption caused by the COVID-19 pandemic, a change in the nation’s political leadership means there could be more regulation. The possibility of more business interruption exists. Unless you own a strong, established business in an area that has survived the first shutdown and your business is considered somewhat essential, the volatility of operating a company with an interruption in cash flow means the business may not make it.

Continuing supply-chain issues. This remains an issue nine months into the pandemic. Shelves in stores are still not fully stocked. Furniture stores and other types of businesses are waiting months to get the necessary components to build inventory. Supply-chain disruptions can affect small businesses in numerous ways: reduce revenue, cause issues with production, and inflate costs.

Changing buying habits. Some buying habits have been permanently altered, and a vaccine for COVID-19 won’t substantially change those habits. There will be more online shopping and more “contactless” shopping. Anything that involves interacting with people will be affected, especially retail.

Changing business strategies. Buying a business is about buying a cash-flow stream, but what businesses are going to be around in the next five years? Disruption in how a business operates can change its core strategy and render the business no longer viable. Think of Blockbuster Video and Netflix, or your local enclosed mall shops and no-contact shopping with Amazon.

Tightening loans. Money is probably never going to get much cheaper to borrow than what it is now, but lenders are more cautious, too. It may be easier to get a home loan for your personal residence, but getting a commercial loan to buy a business is a different ballgame, and lenders are concerned about the unknown in small businesses going forward.

The solution is to slow down and really do your homework. Research and study the marketplace. What kinds of businesses have not been affected dramatically by the pandemic? Which ones won’t have additional regulation imposed on them in the future?

There are lots of businesses to choose from, but be selective. If you find a business that meets your criteria with good cash flow and a promising future, there is a good chance you may get a discount due to the unknowns of regulation and another pandemic. Not all business owners have the luxury of taking their time to sell; some have an urgency to sell. So in that scenario, there is a good chance you could leverage the reasons I mentioned to not buy a small business. Those same reasons could get you a discount on the purchase of the business.

Timing is everything in life, and with proper due diligence and good timing, you may get yourself a good business at a good price.


Terry Monroe (, is founder and president of American Business Brokers & Advisors (ABBA) and author of Hidden Wealth: The Secret to Getting Top Dollar for Your Business with ForbesBooks.  Monroe has been in the business of establishing, operating, and selling businesses for more than 35 years. As president of ABBA, which he founded in 1999, he serves as an advisor to business buyers and sellers throughout the nation. As an expert source he has been written about and featured in The Wall Street Journal, Entrepreneur magazine, CNN Money, USA Today, CEOWORLD, and Forbes.

trade finance

5 Tips for Small Businesses Exploring Trade Finance Options

Just like any other industry, foreign trade businesses require a substantial amount of capital to start and operate. Trade finance makes it possible for small businesses who want to buy bulk goods from international suppliers. With cash available, SME’s can take advantage of buying supplies in bulk and negotiating a discount with the suppliers.

If you’re looking to use trade financing for your company, it pays to know a little bit of how you can make the most out of it. Here are five tips to consider when exploring trade finance options for your small business:

1. Consider the Potential of the Business You’re Applying Financing for

Before actually considering applying for different finance options, it’s smart to evaluate whether the activity you’re getting financing for can produce revenue in the future. Otherwise, you’d be stuck paying for something that isn’t actually making a profit for your business. Plus, if you fail to make payments because the products are not bringing in profits, it could ruin your relationship with the financing company.

The best way to avoid this is to do market research about the business project to determine its profitability. It also helps to explore other opportunities that you might not have tapped into and has the potential of generating higher ROI. Trade finance facilities may also be concerned with your business’s viability, so it’s crucial to show facts (research, projections) to convince them.

2. Ensure Protection Against Changes in the Foreign Currency Exchange

An increase and fluctuations in currencies are expected when doing business with other companies in another country. While fluctuations could mean reduced costs, a substantial increase could mean a loss of profit for the company.

When looking at trade finance options, make sure that the financing facility you’re working with supports the currency you’re doing business in. It’s also helpful to negotiate a fixed rate of exchange and draft it into the contract before starting the business relationship. This would mean that you won’t benefit from any fluctuations and potential savings in cases where the exchange rate fluctuates. But, the stability of having a fixed price would also protect you from potential losses if the exchange rate increases substantially in the future.

3. Look Into the Facilities that Offer Trade Financing Options

Applying for a trade finance option is a big decision for entrepreneurs to make. Considering that they would have to borrow a substantial amount of money, it’s natural for them to worry about the cost it entails. However, taking on precautionary steps and exploring the offers of different companies will help you choose the best deal your company can afford. This will ensure that you won’t miss out on opportunities that will benefit your company in the long-term.

When researching facilities, it’s best to consider the type of trade financing they offer – equity, debt, letters of credit, invoice financing, and others. Compare the prices and identify the options with payment terms that would best suit your cash flow cycle. It’s also smart to consider the ease of access to this financing. How long does the approval process usually take? Do you have to meet specific requirements like minimum revenue or credit score for approval? It’s essential to consider these, especially if you’re in a hurry to get the financing.

It also helps to ask your friends in the industry for recommendations. If they have worked with a specific company before, ask them about their experience. Learning from others is the best way to gauge if the facility is the best fit for you.

4. Talk to the Trade Financing Facility Before Doing Business With Them

Once you’ve narrowed down your options on where to apply for financing, the next step is to come down to their office to discuss their offers. This step is sometimes necessary for determining whether the company will be able to meet your company’s needs and negotiate with them so that you can maximize the financing option. By talking to them in person, you’ll be able to discuss the business and financing needs. If they can help you with it, they can tailor an offer that would best fit your company’s financial capabilities.

Since you’re planning on building a long-term relationship with them,  it’s also vital to know how the financing company handles their clients. Do they offer alternatives in case they cannot meet your financing needs? Do they give out advice? The level of their customer service will help determine whether they care and value their clients or not.

5. Read the Fine Print of the Contract

Finally, ALWAYS read the fine print of the contract. Just like any type of business financing, trade financing entails costs, fees, and other essential facts that can catch you off-guard if you don’t pay attention to the details. As much as possible, take as much time as you need in reviewing the contracts from the financing companies you’re interested in. Be fully aware of your responsibilities and the fees you have to pay for the financing.


Trade financing is a viable alternative to consider when banks refuse to lend small business loans to SME’s to buy supplies internationally. It’s worth noting, though, that every financing facility may have different requirements, so it pays to inquire with them beforehand. Ensure that your company is qualified if you’re planning to pursue applying for trade financing in their facility. Nevertheless, with proper research coupled with the tips mentioned above, you’ll be able to find the right trade finance option and facility that would address the needs of your small business.


What is the Paycheck Protection Program?

After the signing of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the Small Business Administration (SBA) received funding and authority to modify existing loans. Programs were put in place to assist small business nationwide that had been adversely impacted by the COVID-19 pandemic. The purpose of these programs was to provide emergency assistance and healthcare response for individuals, families, and businesses affected by the coronavirus.

One of these programs is the Paycheck Protection Program (PPP), which is granted, in full, by the SBA. The SBA is authorized to grant loans through August 8th, 2020 due to the CARES Act’s intention to provide relief to America’s small businesses expeditiously. Lenders will rely solely on certifications made by the borrower and use of loan proceeds. They must rely on specified documents provided by the borrowers to determine loan amount and eligibility for loan forgiveness.

The PPP has seven key characteristics business owners should familiarize themselves with. By knowing them, owners will know how the PPP works and whether they are eligible or not.

The first one is eligibility. The most important step is to submit the appropriate documentation to establish eligibility—such as payroll processor records, payroll tax filings, or income and expenses from a sole proprietorship.

You are eligible: if you have 500 or fewer employees whose principal place of residence is in the United States; if you are a business which operates in a certain industry and meets the applicable, SBA employee-based size standards for that industry; if you were in operation on February 15th, 2020 and had employees for whom you paid salaries and payroll taxes; if you are an individual who operates under a sole proprietorship or an independent contractor, or eligible self-employed individual; if you are not engaged in any activity that is illegal under federal, state, or local law; if you are not an individual who employs nannies or housekeepers; if you are not the owner of 20-percent or more of the equity of whose applicant is incarcerated, on probation, on parole, or has been convicted of a felony within the last five years; and if your business is not owned or controlled by anyone who has obtained a loan from the SBA or any other federal agency that is currently delinquent or has defaulted within the last seven years and caused a loss to the government.

The second one is the loan amount, which is less than $10 million, or the calculation of a payroll-based formula specified in the CARES Act. To calculate this formula, you must add payroll costs from the last 12 months for employees whose principal place of residence is the United States; subtract any compensation paid to an employee in excess of an annual salary of $100,000 or any amounts paid to an independent contractor or sole proprietor in excess of $100,000; calculate the average monthly payroll costs; multiply the average by 2.5; and add the outstanding amount of an Economic Injury Disaster Loan (EIDL) made between January 31st, 2020 and April 3rd, 2020 minus the amount of any advance under EIDL COVID-19 loan.

The third one is the interest rate, which will be 100 basis points, or one percent. After that, we have the loan maturity. The CARES Act established the loans will have a maximum maturity of up to 10 years from the date the borrower applies for loan forgiveness. However, the SBA determined that a two-year loan term is sufficient, due to the temporary economic dislocation. Payments are deferred six months from date of disbursement. Interest will continue to accrue during that period.

The fifth key characteristic is the uses of the loan. The PPP can be used for payroll costs, costs related to the continuation of group healthcare benefits during periods of paid sick, medical, or family leave, and insurance premiums, mortgage interest payments, rent payments, utility payments, interest payments on any other debt obligations that were incurred before February 15th, 2020, and to refinance an SBA EIDL. The loan forgiveness can be up to the full principal amount of the loan and any accrued interest if the borrower uses it to cover at least 75-percent of compensation—based on 2019—but not exceeding $100,000. Also, if not, more than 25-percent of the loan forgiveness amount may be attributable to non-payroll costs, and the borrower must have claimed a deduction for 2019 for the abovementioned expenses.

Last, but not least, the seventh key characteristic is the amount of PPP loans a business can apply for. Each business owner can only apply for one PPP loan.

The PPP is a great loan opportunity granted by the SBA. If your business has suffered due to the COVID-19 pandemic, you should check your eligibility and try to apply for this loan. However, if you find you do not meet the requirements, there are other SBA loans you can apply for. Make sure to have the proper documentation and select the loan that will benefit your business the most.


Mirel Barcelo is the founder and owner of Corp 1 Financial Services, LLC, where she offers her comprehensive services as a CPA in Florida.

Barcelo comes from extensive education and experience in accounting. She graduated from Florida International University with a Bachelor’s in accounting, as well as an Executive Master in science of taxation. Barcelo then went on to become a Certified Public Accountant in the state of Florida.

Her company, Corp 1, LLC., specializes in personal and corporate income tax services, IRS audit management and representation, tax preparation, accounting educational course programs, and sales tax compliance. Barcelo also offers accounting and bookkeeping services, compliance consulting, corporate services, and notary services.

Prior to owning and operating her own company, Barcelo acquired nearly a decade of work experience in tax services, first as a senior associate in state and local tax services at Grant Thornton, LLP., then advancing to a senior property tax consultant position at Ryan, LLC. During this time, Barcelo was responsible for national property tax compliance, valuations for property tax purposes, accrual analysis, managing clients’ budgets to ensure projects are handled efficiently, and overseeing and managing the preparation of over 5,000 tangible property tax returns.

For more information, please visit


How Businesses Can Pivot While Slowed Or Closed During Difficult Times

With businesses across the U.S. having closed temporarily or reduced services due to the coronavirus pandemic, company leaders are trying to find ways to stay afloat until the crisis passes – and figure out how to move forward into an uncertain future.   

Dr. Kyle Bogan,  a business consultant and speaker on workplace culture, says this unprecedented event has caused companies to learn how to pivot on the fly and consider changes that will not only allow them to survive the crisis, but thrive later on.

“Business owners are attempting to balance decreased demand with caring for and providing for their team, and protecting the future of the business they built,” Bogan says. “While there is a negative impact on revenue, many businesses will come out on the other side of this pandemic stronger as a business and stronger as a team.

Bogan suggests ways businesses can pivot during the pandemic that could help them short- and long-term:

Offer online services. “The critical element is to be creative and innovative to find new ways to deliver special services and products to your customers, and discounts where possible,” Bogan says. “They won’t forget that. Going as far as you can for them during an unprecedented time will make it likely they stay with you long after this is over.”

Expand how you inform and update customers. “Let your customers and audience know how and what the company is doing, how it’s adapting,” Bogan says. “Moreover, show you care how they’re doing. Offer links of advice on your website to help them deal with the many aspects of this crisis. If you’re authentic and honest, social media is a way to connect in a kind and helpful way, and that will add more substance to your brand’s image.”

Tighten connections with employees. Many companies are set up to work from home, and they aren’t as hobbled as others that are not. Bogan says consistent communication, enhanced by video conferencing, is vital to stay on top of business processes and to boost morale. “The entire team needs to be better informed and felt cared for and valued, and email alone isn’t sufficient,” Bogan says. “Owners and CEOs need to be transparent with teams about company situations. That builds trust. Send your team resources for anything that could help them during this difficult time. Encourage professional learning during downtime and get creative input from the team, giving them a stake in the future.”

Consider ways to make your culture stronger. Building stronger relationships can help build a better work culture, but that’s only one piece. Bogan says this is a good time for leaders to objectively look at their business culture and find ways to improve it. “The question is, do you want to be intentional about creating a team-first culture that represents you and your business, or do you want it to create itself without a clear vision?” Bogan says. “If you want to experience accelerated growth when this is over, creating a team-first culture is the path you must take. Financial success will follow. People are more willing to spend time and money with your brand if they can feel your team is happy.”

“Truly, we are all in this together – customers, business leaders, employees,” Bogan says. “That’s how a business should think and communicate now during the crisis and going forward.”


Dr. Kyle Bogan ( is a general dentist and a speaker/consultant on workplace culture. He is the owner of North Orange Family Dentistry. Bogan earned a Fellowship in the Academy of General Dentistry and a Fellowship in the International College of Dentists. He is a member of the American Dental Association, the Ohio Dental Association, the International Dental Implant Association and the American Academy of General Dentistry. Bogan earned his Doctor of Dental Surgery degree from The Ohio State University, graduating Magna Cum Laude, and played sousaphone in the marching band.

How Small Business Should Think About Financing

It’s no secret that over half of small businesses close their doors within the first five years. One of the critical problems that often occur has little to do with the innovation, ingenuity, or work ethic of the small business owners themselves, but rather the lack of access to sufficient capital to cover the ebbs and flows of their operation and its associated costs. 

Scaling any idea or enterprise, to me, is less often about “entrepreneurship” —and other catchy terms we can print on a business card— and more about meeting the demands of others, like payroll and customer expectations. Simply put: small business owners need capital resources— they need cash. 

Historically, small businesses have had limited options to access capital: savings, friends and family, credit cards, traditional bank loans, or the occasional SBA loan. Enter the financial crisis of 2008-2009, which ushered in a new regulatory environment that contracted these historic capital resources, thereby creating the market-driven need and demand for non-traditional banking options.

Consequently, we find ourselves operating in a new era, one in which enterprising nonbank funders have brought novel and different capital products to the small business market. This has been largely accomplished through an ambitious mix of fintech and financial innovation. These previously unavailable financing options give small businesses more resources to consider than ever before. Now their next step is to explore them and consider how their small business might decide on the best option for their specific needs. 

As we contemplate these innovations, here’s a quick list of some of the best financing options available to small businesses:

Business Term Loans: Best for businesses looking for working capital, equipment purchases, or to purchase inventory or other fixed assets. For short-term loans, it can often be matched to a specific project and repaid to coincide with the completion of that project in 6 to 12 months. For longer-term loans, the repayment can be stretched out to 3 to 10 years, but these often require higher levels of collateral coverage or a personal guaranty by the business owner. 

Pros: Great product for larger one-time investments with targeted cash loans flow that payments can be matched. 

Cons: Larger dollar amounts and a longer payback term will require increased time, energy (think: bank meetings and interviews), and documentation. 

Equipment Financing: Best for one-off purchases like restaurant equipment and machinery. 

Pros: no upfront spend; if the business owner has impaired credit the fact an asset is involved as collateral can make it easier vs. purchasing the equipment; and tax-deductible.

Cons: Overall cost is usually more expensive in the long-run; cost inclusive of fees if the lease is terminated early can be substantial; and must take into account all terms and conditions that can be complicated (who handles and addresses a break-down in the equipment? etc).

Small Business Administration (SBA) Loan: Best for business owners who need capital for a variety of longer-term business expenses. It is government guaranteed so the process can be daunting and is processed through a bank that has an SBA loan program. 

Pros: Cost and longer-term repayment; great product for owner-occupied real estate.  

Cons: Requirements are strict; process is time-consuming (60 to 180 days); high upfront fees; and requires strong personal credit scores.

Business Line of Credit (“LoC”): Best for businesses with more volatile sales and cash flow. Flexibility to drawdown and repay based on the needs of your business.  Often secured by accounts receivable and inventory. Some LoC’s offered by FinTech operators do not require business collateral but do require a personal guaranty.  

Pros: Can access quickly (assuming facility is in place) to solve urgent issues or expenses; and great for managing working capital needs and the business’ short-term cash flow needs.  

Cons: Reporting can be much more intensive vs. other products available; upfront and ongoing fees can be expensive, especially if the LOC is rarely drawn down.

Revenue-Based Financing: This is a financing option where the repayment schedule is tied to the future revenue of the business. The genesis of the product is that the funder operates as more of a partner and is taking some level of “equity-risk”. If the revenue decreases or the business fails, the repayment is either stretched out or in the case the business fails the funder has no recourse. Small businesses can utilize this product for project financing, working capital, growth investments, or short-term needs. 

Pros: Quick access; repayment risk mirrors the revenue; no business or personal recourse except in the case of fraud.  

Cons: Products are generally 12 months or less; more expensive given level of risk with limited recourse; reporting can be intensive as changes to payment schedules requires bank and financial verification.

Invoice Factoring: The business can turn its unpaid invoices into immediate cash. The invoice factoring company collects directly from the customers and distributes capital to the business, net of its fee. 

Pros: good for managing cash flow; typically a short-term financing product (30 to 90 days).  

Cons: cost can be expensive, especially if repaid much quicker than anticipated; can be disruptive notifying customers to change their payment instructions to the factoring company; requires technology integration or higher level of reporting and the business’ customers will be dealing directly with your funder if they delay payment – not you as the business owner.  

Angel Investors/ Venture Capital: Best for small businesses who want to scale quickly. 

Pros: entrepreneurial background provides increased insights and foresight vs. dealing with alternative finance providers, banks, or the government; larger investor network to leverage for additional funds or additional business; and capital remains in the business (vs. interest costs). 

Cons: Higher rates of returns expected (typically at least 5x their investment); requires giving up equity in the business; process will be intensive; typically reserved for high visibility, disruptive companies pursuing large addressable markets on a national or global scale; and will require operating agreement additions to governance to protect their investment in the case of underperformance.

Bootstrapping: Best for businesses with principals that have savings or expendable income who want to preserve equity ownership and cash in the business. 

Pros: maintain ownership position and keeps all cash generated either in the business or available for dividends. 

Cons: Growth limited to the owner’s cash position; risk missing market opportunity because thinly capitalized; challenging if a short-term need requires more cash than available.

While the pros and cons of this list provide a guide to financing in 2019, any financing decision should ultimately come down to your assessment of the cash flows of the business (today and in the near term), demonstrated capacity to handle credit, costs versus profit opportunity (positive ROI), and repayment thresholds. 

The good news is, enabling technology allows small business owners to access various forms of capital quickly and efficiently. There is no day like today to explore options to fund entrepreneurial dreams. 


Vincent Ney is a founder and CEO of Expansion Capital Group, a business dedicated to serving American small businesses by providing access to capital and other resources so they can grow and achieve their definition of success. Since inception, ECG has connected over 12,000 small businesses nationwide to approximately $350 million in capital