With under two in five receiving full funding through bank loans, small businesses seek alternative growth financing options.
Leading invoice funding company Viva Capital says growth financing challenges are causing small businesses to seek alternative options. Full coverage of the topic is available in “Top Business Growth Financing Options by Stage,” which is now live on VivaCF.net.
The report comes on the heels of the latest Small Business Credit Survey from the U.S. Federal Reserve Banks, which highlights new challenges in growth funding for small businesses. Just 39 percent of small businesses receive full funding through bank loans, with full funding levels across all sources faring only marginally better at 52 percent. Meanwhile, more than half dipped into their personal funds over the past 12 months, while an almost equal amount turned to friends or family for funding.
Businesses are denied, or they see high denial rates, and they believe they won’t qualify for funding, so they put personal assets or relationships at risk, not knowing there are other avenues.”
— Greg DiDonna, President and Partner of Viva Capital
Read More on Fintech : Global Fintech Interview With Justin Meretab, Co‑Founder and CEO of Layer
“This scenario is all too common,” explains Greg DiDonna, President and Partner of Viva Capital. “Businesses are denied, or they see high denial rates, and they believe they won’t qualify for funding, so they put personal assets or relationships at risk, not knowing there are other avenues.”
He notes that, in reality, there are many different types of financing options available at each stage of growth, and alternatives to bank loans are often a better fit depending on what’s happening within the company’s finances at the time. For instance, startups can tap into grants or seek venture capital, provided equity dilution is not a concern. Growth-stage businesses can explore trade credit or business lines of credit. Meanwhile, mature companies can often access commercial bank loans or leverage bonds to secure growth capital.
“Invoice factoring, which provides immediate capital based on the purchase of B2B receivables at a discount, is unique in that it helps businesses at each stage of growth,” DiDonna continues. “Startups appreciate it because it’s not contingent on their credit, while growth-stage businesses leverage it because it evens out cash flow and scales with them. Mature businesses also use it, but often as a way to avoid taking on debt, so their credit remains accessible for greater needs, such as major expansions.”
Those who want to learn more about factoring or request a complimentary factoring quote from Viva Capital may do so by visiting VivaCF.net.
Catch more Fintech Insights : The CFO’s New Analyst: Using Generative AI for Strategic Financial Modeling
[To share your insights with us, please write to psen@itechseries.com ]
