Invoice factoring from a factoring company is not necessarily going to be available for every business owner. Company’s who do not have invoices or are just trying to get formed, will need access to other forms of capital. Even with all the bad news, one option is the local bank. Local banks are tasked to help small businesses. If the amount needed is fairly small, under $25,000, you might qualify for a signature loan. The loan is made out to the company but you are personally signing for the amount borrowed.
In order to secure a signature line of credit the owner will need fair to good personal credit. It’s important to put together a document package that includes; information about your business, a list of customers you have lined up, show what money you have already invested in the business, personal tax returns, and company financial statements. The key to securing a loan is to acknowledge how much you will need, what are you going to use the capital for, and how do you plan on repaying the loan. Then take your package around to local banks, but don’t be discouraged if a particular branch turns you down. Go to a different branch and try again. What you are looking for, if your business idea is good enough, is an “internal champion.†Keep going until you find a banker, who believes in you, and is willing to shepherd the loan through the banking process.
The threshold for a small signature line of credit for a business owner with good credit should be easy to cross. One added benefit to offer the bank is to bring them your banking deposits if you get the loan. Having a small signature loan will allow you to have access to receivable factoring once the company is viable enough to qualify.