SOURCE: Sharp Shooter Funding

Sharp Shooter Funding

February 04, 2016 08:21 ET

Paul Pitcher -- Sharp Shooter Funding -- Borrowing Through the Small Business Lifecycle

CALGARY, AB--(Marketwired - February 04, 2016) -  There's no question there's a difference in the financing options available to a startup, a growing company with two or three years under its belt, and an established business that has been around for ten or more years. Considering the small business lifecycle as we talk about small business financing will help point you in the right direction when you look for financing.

Although traditional options are more difficult to come by for many businesses today, there are options available for younger companies and even those with less than perfect credit profiles. In fact, there are more options available today than ever before, provided the business owner is willing to think outside the box and look in places they might not have considered just a few years ago.

Financing Startups

Only about half of the businesses that start today will still be around five years from now -- which makes it very difficult for a lender to evaluate a business with no track record, no revenue, and no history. For many startups, looking at alternatives to the traditional small business-lending model makes a lot of sense. Some of the more popular and successful options for start-up financing include:

  1. Friends and Family: Borrowing from friends and family might not be the first place business owners look, but it's one of the places they find the most success -- outpacing crowdfunding, grants, trade credit, business credit cards, bank loans, online business loans, factoring, merchant cash advance, and equity financing for all but the largest and more established small businesses.
  2. Crowdfunding: This is becoming a very popular way for early-stage companies to access capital.
  3. Non-Profit Micro-Lenders: Non-Profit Micro-Lenders focus on small businesses that can leverage a relatively small loan amount into a big impact within their businesses. These micro-loans often include very favorable loan terms with very low or even no interest.

The SBA can also be a good alternative for qualified startups. They offer micro-loans up to $50,000 through non-profit community-based organizations with experience in lending as well as offering management and financial advice to borrowers. According to the SBA, the average loan size in the SBA microfinance program is about $13,000.

Young Businesses with at Least a Year in Business

Once a business passes the year mark, its options increase. Although a traditional lender like a bank or credit union typically wants to see a few more years in business, online lenders will work with a younger company that has a year under its belt, provided it has a strong business.

Equipment leasing, factoring, and other types of financing are also available to these businesses. The cost of this financing will vary depending upon credit profile and how quickly they need the capital.

These online lenders are typically looking for strong cash flow and annual revenues of at least $100,000. Many of these lenders also specialize in smaller loan amounts ($250,000 or less) to meet the needs of many small business owners. What's more, personal credit score is only one of many measures used to evaluate a business's creditworthiness, so even borrowers with a less than perfect credit score can sometimes access capital this way.

Well-Established Businesses

Businesses that have been around for many years and have a well-established positive credit profile have the most options. Traditional lenders like the local bank can be a good source of capital. However, don't dismiss online business loans or others described above. Many online lenders offer loans designed to meet both longer-term and shorter-term capital needs.

Even if you are a well-established business, an online loan can make a lot of sense given the speed and efficiency of the application process if you need capital quickly and time is a factor.

The additional options give these business owners the opportunity to find the loan type and loan terms that best meet their loan purpose -- and allow business owners to respond quickly to a need for capital to fuel a growth opportunity or meet a short-term cash flow need.

Many small business owners rely on borrowed capital to fund business initiatives and fortunately there are more options available today than ever before. This is particularly true for younger businesses and startups.

Sharp Shooter Funding offers a wide selection of small business loan products to help business owners throughout the lifecycle of their businesses from early stages to established businesses with rates as low as 5.9 percent for the best-qualified borrowers. Visit www.SharpShooterFunding.com to learn more about what Sharp Shooter has to offer.

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