Financing A Small Business or Start-Up in McKinney, TX

Once you’ve taken the leap of faith and decided to start your own business, keeping it sustained over a long period of time means you’re going to need access to capital through financing at some point. Sometimes it takes a little time to get financing because banks and other lenders usually want to see proof that your business is stable and capable of making payments. Usually when you just start out, you’ll want to have enough of your own savings, or if necessary a credit card or home equity loan to get started.

There are also grant programs and non-profit loans that can help eligible Texas residents who startup businesses, but once you’re ready for some heavy financing, you may want to look into a few other options.

Small Business Administration Loans For Startups

Usually the most recommended loans for small business ventures are SBA loans which can help you if you don’t have much of a business history. The SBA provides a lot of useful information for new applicants on how they can get approved for a loan and the kind of documents they should be ready to show the lender. More often than not, you’ll need to have business assets of value that that can be used as collateral in a loan, and in some cases you may even need a personal guaranty for your loan. The good news is the SBA will usually allow for business owners to be approved even if their credit has been troubled in the past.

Unsecured Business Lines Of Credit

An unsecured business line of credit can be very helpful because it works a little like a credit card, though sometimes with limits to business-related purchases. But the great news is this form of financing doesn’t require you to put up any business assets as collateral to qualify. You do need to have good credit and be able to show that your business profits are strong enough to make payments in order to qualify for this kind of financing. There are a few instances in which either a business owner or partner may be able to get a line of credit without a lengthy revenue history if their personal credit has been very good.

Accounts Receivable Financing

Sometimes the biggest struggle for businesses who offer subscription-based services or send out billing invoices to clients is that payments can get delayed. If you have a lot of unpaid invoices with your accounts receivables, you can look into accounts receivable financing, also known as invoice factoring. A financing company pays you for your invoices, but they’ll usually keep a small percentage of the outstanding amount due in order to make a profit. All you need to qualify for this financing is usually just a large quantity of unpaid invoices.

Merchant Capital Advance Financing

Another form of financing you can get without good credit or a long history of being in business is a merchant capital advance, also known as a merchant cash advance, which is based on credit card sales. It’s a little similar to invoice factoring, but instead of buying current invoices that customers haven’t paid yet, a merchant cash advance is financing for credit card sales that haven’t happened yet.

A lump sum will be paid to you in your business bank account, and then each future credit card sale you make will have a portion deducted from it. This will continue until the advance is paid off. Keep in mind that though merchant capital advances can finance a large amount of money, they do sometimes have factor rates that can add up. However, this form of small business financing can be a great tool for business owners who don’t qualify for regular loans.

Equipment Leasing Financing Options

Since buying business equipment outright can be a hefty expense on your business budget, sometimes financing it through leasing or lease-to-own options is better. Usually this means you will make monthly payments for the equipment, and if your contract is lease-to-own, you’ll get to own the equipment after you’ve fulfilled the terms. There are usually termination plans built into leasing as well just in case you decide at some point you no longer need the equipment.

Hard Money Loans For Property Financing

If your business is in the real estate development or construction industry, a hard money loan can work if you’re able to put up a large enough down payment. A hard money loan is usually meant to be a short-term loan that is less strict than a mortgage but can serve as a temporary funding solution until you qualify for a mortgage. Usually a hard money loan is meant to be financing that’s used for residential properties that you’re going to flip or lease on the market, but there are a few other situations that may qualify you for one.

Once you decide what kind of financing you’re interested in, the next part is assembling all the appropriate documents. This will usually take extra time to do although some business loan alternatives don’t require nearly as many statements. But you should still be prepared to issue the following:

  1. Tax statements for local, federal, payroll, sales and other required payments you make
  2. Income statements
  3. Cash flow management documents
  4. Your business structure documents listing all applicable owners and partners
  5. Business licenses if applicable
  6. Documents of any liens on your assets
  7. Relevant patent, copyright and trademark details

If you’re ready to apply for small business financing, feel free to contact us here at Safe Harbor Commercial Capital to discuss your options.