One of the biggest challenges facing an entrepreneur wanting to start a business is raising start-up capital. New businesses owners are usually advised to not only save the start-up capital they need, but to try and save up enough money to cover the first six months of the company’s overheads. When you start considering all of the expenses involved in running a business for six months, including salaries, equipment purchases and office space rentals, it’s no wonder the idea of being an entrepreneur can be daunting for many.
A lot of planning goes into starting a business, but there are unique ways a factoring company can help you get going:
It’s easier to raise funds through factoring than venture capitalists or banks
Many entrepreneurs wrongly assume that they will find venture capitalists eager to invest in their business. While it’s true that professional investors will always be looking for businesses with high chances for very high profits, it’s not easy to get access to this cash. Even if you were to find an investor to fund your start-up in exchange for giving up a portion of your equity, the arrangement typically comes with a long list of expectations for growth, reporting, management and business operations.
If you’re the type of start-up owner who wants to do your own thing, then it’s time to consider other funding sources. Another option is a bank loan, but banks are becoming increasingly strict in their business and personal lending and it can be a lengthy process to get a bank to approve a loan for a new start-up. The fact that your business probably doesn’t have a long-standing credit history or assets can make this route even harder for new business ventures.
Invoice factoring is often ideal for new start-ups because it’s cheaper and faster than both venture capital and bank loans (Read more about “AR financing vs. Bank Loans“). When you factor your invoices, you can receive a large portion of the invoice amount within a day or two. Factoring companies don’t assess your company’s credit history; instead they look at the creditworthiness of your clients. Getting approval from a factoring company to factor your invoices is also a quick process.
Interstate Capital has helped many start-up businesses fund their new ventures. Get an instant factoring rate quote today.