Monday, May 3, 2010

Small businesses turn to alternative funding sources for help.

Small businesses, particularly start-ups are turning to non-traditional financing sources to solve cash flow problems in their businesses and fund growth opportunities.

Many small businesses have been turned away from traditional lenders and are discouraged by the overall finance communities response to their needs. As a result many are seeking other avenues such as family members, equity partners short term investors, asset based lenders and factoring firms.

Credit is a problem for most small businesses, slowing down their ability to grow or stopping them all together. Patricularly now when institutions have revised their lending requirements and made obtaining new creidt more difficult business are looking for more creative ways to fund growth.

Be careful though. Many private investors want at least 25% ownership in a venture and banks want to secure loans with personal tangible assets.

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