Other possible debt solutions for small businesses include purchase order financing and factoring.  Both can be used effectively by small, emerging businesses who are experiencing the kind of hypergrowth that scares traditional bank financing sources.

I just helped a specialty snack foods startup with both purchase order financing and factoring.  Bank financing is currently unavailable to this company though within a few months, the company may qualify for a minority loan program.

I'm also working with a two year old, hypergrowth apparel company that has just landed huge purchase orders that will more than triple its sales overnight.  We're in discussions with both purchase order financiers and factors to craft a solution that will provide access to working capital with no dilution of their ownership position.  This company also may qualify for a minority loan program within a few months.

There's no doubt that both purchase order financing and factoring are more expensive than a bank line of credit.  But if used wisely, these asset based financing tools can provide the capital a small business needs until it qualifies for a bank line or an SBA loan.  Plus, both are a lot faster and cheaper than the return an investor is looking for on its equity investment.

Yes, I would be happy to speak with you about your financing requirements to see if I can help.  Please give me a call at 310-371-4011. 

I see that you are a military veteran.  When we speak, we'll see if the new Patriot Express loan program may be an appropriate funding source for you.

Purchase order financing is the advance of funds by a lender in an amount up to the full cost of goods sold associated with a purchase order.  Factoring is the sale of accounts receivable in order to achieve an acceleration of cash flow.

As I mentioned in my posting, startups can use both of these funding tools when they've been unable to obtain cheaper financing or simply can't get the financing they need quickly enough.  Both purchase order financing and factoring can be approved in a matter of days from submitting a complete funding application. 

A hypergrowth company is one that is growing at an unusually high rate.  Banks are hesitant to lend into these situations for fear that the company's infrastructure and management skills won't keep up with revenue growth.  Banks are also concerned that a company is pursuing high revenue growth without focusing on the profits and cash flow that will repay their loan.