It's not always easy for new businesses without the proper credit history (non-bankable startups) to borrow the money that they need to grow their operations. Because startups do not have a long credit history or the high credit scores that traditional lenders require, they often are forced to use credit cards or turn to their immediate family when they need to borrow money. If that doesn't work, they next turn to extended family members, friends, former colleagues or even neighbors and ask for a loan.
However, when startups use their own money or borrow from individuals they know, it can be risky. Should the newly established business experience any kind of problem, personal credit and important relationships may greatly suffer.
An Effective Solution: AR FINANCING
There is a better way. Accounts receivable financing (ar financing) provides an excellent alternative to relying on personal funding and family, friends, or anyone else for funding. Instead, ar financing is designed for non-bankable startups and is based on the credit strength of their bigger clients. According to small business experts at The Houston Chronicle, it is a sort of financial loan that utilizes receivables (your unpaid invoices or money owed to your company) to secure borrowed funds. Additionally, when startups choose non-recourse ar financing, should those bigger clients become insolvent for some reason, startups are safeguarded with credit protection.
Benefits of AR Financing
This sort of funding can make resources trapped in receivables available for use. Ar financing can provide almost immediate relief to ensure you receive the funding you need to manage your business and help it reach its full potential. Because newly established businesses can use ar financing to pay bills in a timely manner or purchase inventory as needed, they are able to grow their businesses and build a strong credit history for the future. Rather than trying to retrieve outstanding debts or find hard-to-get loans, your company can move forward with business.
If your non-bankable startup business is having trouble obtaining a loan, it may be a smart move to explore your ar financing options. It may be just the type funding your business needs.