Alternative Financing for Small Businesses

There are methods of alternative financing for small businesses known as bootstrapping.

Bootstrapping are ways for an inventor to start a small business and get resources to develop their invention.

The term "bootstrapping" is a metaphor from when boots had loops or tabs to help pull them up your leg.

Therefore the saying, "pull yourself up by your own bootstraps", or in other words "do it yourself."

Bootstrapping refers to how to get resources or money while minimizing your debt or the amount of equity others have in your company.

The most common method of bootstrapping is to use your own money and resources.

Here are some others.

Factoring

Factoring is where you sell your accounts receivable (invoices) for a discount. This gives you money immediately while still providing terms of payment for orders.

Factoring is not a loan and does not involve credit. It is the sale of an asset - money owing from sales - and is a method of alternative financing for small businesses.

Equipment Leasing

This is a popular method of alternative financing for small businesses. You can lease almost any type of equipment for a series of tax deductible payments.

Leasing equipment is secured by the equipment much like car leases. For equipment less than $100,000 you don't usually have to provide financial statements, tax returns or even a business plan.

Many leasing programs have no down payment, low interest rates and quick approval.

The benefit of leasing is that you preserve your cash flow while deducting the expense of leasing and related costs.

Leasing is available for manufacturing and production equipment, research equipment, office equipment, all kinds of equipment. Leases are negotiable and you should shop around and negotiate.

You can also lease used equipment, which is a secondary market for leasing companies. You can even sell your own equipment to a leasing company for cash and lease the equipment back from them with a buy back option.