Business financing is one of the most challenging obstacles entrepreneurs will face at one time or another. During this period of economic uncertainty, this is an even greater need for many businesses.

The best sources and structure of financing are based on a particular company’s needs and can change based on a company’s current operating environment. Assessing the length of time financing is needed is often a good place to start, although many types of financing can be appropriate for shorter or longer-term needs.

Short-Term Financing

Short-term financing, less than one year, can take the form of a line of credit, receivable financing with a factoring company, inventory financing, construction loans, and more.

Medium-Term Financing

Medium-term financing, one to five years, can take the form of equipment financing, equipment sale-leasebacks, term loans, and government programs.

Long Term Financing

Outside of a real estate mortgage loan, long term financing can be difficult and can include equity from angel investors or venture capitalists. Multiple sources of debt can also be used and can consist of mezzanine financing, convertible debt, or sale-leaseback transactions on real estate.

Sources

Besides traditional banks, there are countless other sources available. These include:

• Factoring Companies
• Private Lenders
• Credit Unions
• Friends and family
• Crowd Funding
• Existing Shareholders
• Vendor financing
• Private Equity
• Government Grant and Loan Programs
• SBA Loan Programs

Attaining capital for your small business may look different for you. Perhaps growing at a slower pace without being strapped down and forgoing debt to reduce risk may be a better option. Repayment agreements to lenders and investors have serious implications if done hastily. However, if you vet your options appropriately, external financing can take your business to the next level.

Overall, a company’s capital structure is often vital to meeting business objectives. At Wilke & Associates, we have experienced financial leaders who can help you not only structure the appropriate type of financing but also make introductions to appropriate lenders and investors.

By Greg DeFeo

Greg DeFeo is a consulting manager with Wilke & Associates focusing on business profitability, business financing, and mergers and acquisitions. Mr. DeFeo has over 30 years of financial and operational leadership experience in for-profit and non-profit organizations. Prior to joining Wilke & Associates, Mr. DeFeo was President and CEO of Pittsburgh Technical College, successfully leading the college for over a decade. Before leading Pittsburgh Technical College, Mr. DeFeo held various financial, accounting, and operational leadership positions and has served on multiple for-profit and non-profit boards.