Why SMBs Can Have a Tough Time Getting Funded

An article in the Globe and Mail does a good job of summarizing the different avenues that small businesses, especially newly established companies, can go to gain financing. The options are either Debt or equity.

Equity financing can be tricky for a small business, especially one where the entrepreneur doesn’t have a lot of experience in raising capital. Valuation and control of the company can both tricky covenants to navigate, even for seasoned professionals. It might be enticing to take on an equity investor where you don’t have to worry about monthly payments and interest but in the long run, raising equity can cost you a lot more than taking on some short-term debt.

When raising debt, a borrower has to realize that most lenders are not looking at your story, they are looking at your assets. The assets on your balance sheet give the lender an idea of the value of your company might be in a recovery process. The easiest asset to borrow against are your invoices; these are short term and if they are confirmed and validated correctly, basically like cash. Invoice financing is a very popular way to tap into the assets of your company and borrow to smooth out your cash flow or invest in growth.

About Payplant

Payplant provides growth financing for entrepreneurs, by entrepreneurs. Its Pay Me NowTM digital invoice-financing service provides cash to businesses when their customers pay too slowly. Payplant helps businesses with PO and Invoice Financing, Asset Based Lending, Term Loans and Customer Financing products. Payplant works with companies that don’t currently qualify for traditional bank financing, have grown too quickly for their current lender or are at the point in their evolution where an influx of working capital can elevate their business to achieve rapid growth. Payplant delivers fast and reliable funding, at very attractive rates and is completely on demand. For more information, visit www.payplant.com.