Under a variety of different circumstances, small businesses can end up desperately requiring money quickly. On those occasions, there are many options in non traditional funding that are available. Many accountants and attorneys will not suggest using these options, because they are not risk-free. In difficult situations where money is needed urgently and can keep the business afloat, however, they can make all the difference.
The selling off of assets is the first way that cash can be gotten quickly. Many people don’t realize how much money can be brought in by doing this. In the long run, one may pay more if a car is sold now, then another one is leased for an extended period. Nevertheless, the money from such a sale can be necessary for urgent payments on the business‘s behalf.
Another way to get money is to borrow from the value of life insurance. This will only work with a whole life policy. It will not be allowed with term policies. After about three years, a policy will have enough value to borrow from. insurance companies will often allow their clients to borrow 90 percent of that value. The life insurance will remain in effect as long as the premiums are met.
There will be interest involved in paying back the money borrowed from life insurance, though. The interest, however, is less than what would be paid if a cash advance was taken on a credit card. Doing so with a credit card is often the way many people get quick money. The downside with using one’s insurance, however, is that if death were to occur before the money was paid back, the benefits for the family would be less.
One may also use a factor for money. This is when one’s receivables are sold to a third party – the factor – for cash. Between fifty and ninety percent the value of receivables will be advanced by the factor. Then the factor will collect the money from the owner’s creditors.
Once the money has been collected, the business owner will receive the remaining ten to fifty percent, excluding the factor’s fees, which will be between one and five percent. The fees will are also dependant on the volume of receivables.
One can also outsource the financing. financial headhunters will find investors for entrepreneurs in exchange for some of the capital brought in. There are two downsides to this, however. The first is that a large sum of money is being paid to the financial headhunter. The second is that the investors will want a large part of one’s business itself. If this is the chosen form of non traditional funding, though, accountants and attorneys can point out financial headhunters to speak with.
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