|Bookmark This Page||Newsletter Sign-Up|
|Home | Apply For A Business Loan | Calculators | Blog | Articles|
Small Business Financing Blog
A Business Loan That Is Not A Business Loan – Part 2
Money is an end to a mean. It is used to purchase goods and services in your small business. And, it is those good and services that makes small businesses work, grow and prosper.
Simply enough, business owners or new startup companies don’t take business loans just to stock pile cash, to pay themselves large salaries or use them to pad their bottom lines – they take business loans to buy goods and services to grow their companies – which in turn, hopefully, will earn enough revenue to do all the other things that businesses are suppose to do like secure the financial future of the entrepreneur and provide needed products and services in the community that the business operates.
So, if the end goal of seeking a business loan is to merely purchase goods and service – and your small business does not qualify for and cannot get that needed business loan – then what about shifting that focus away from business financing and instead finding others ways to get the products and services your company would have gotten had it been approved for that loan.
While that may sound a little far fetched and is definitely hard to write down, it is much easier to do in the real world.
In our last post, we discussed using personal assets and personal resources to secure some type of financing that can be used in your business. While those are very good ways to fund a small, growing business – the goal of those loans is to bring money into the company and then use that money to buy the things the business needs to grow and succeed.
Now, let’s talk about skipping that middle step and just merely focusing on getting those things (goods and services) the business needs.
You Don’t Need A Business Loan
Many small businesses seek outside financing in order to purchase materials – be it raw materials or inventory – from suppliers. Then, take those materials or inventory and either add value to them to meet customer’s orders or to stock their shelves to sell to the general public.
Or, other small businesses seek outside financing to purchase products and services that help them better run their companies from needed hardware and software to services like marketing and accounting.
But what if I told you that you don’t need outside financing to get all of these things. You would think I was crazy – well, maybe I am but then again ...
Trade Credit: If the goal is to get materials from your suppliers, then just ask those suppliers for that material. Many suppliers will offer what is termed trade credit – allowing the purchaser (your small business) days, weeks or even months to pay for those goods. This then gives you time to employ those goods in your business and collect payments from your customers before having to make payments to the suppliers.
The suppliers win because they get your business and keep their companies going. You win in the fact that you get what your business needs without the hassle and expense of a business loan.
Vendor Financing: Just like trade credit, many vendors will offer credit terms to their small business customers and some will even actually prove capital as well – but that capital can only be used to purchase the vendor’s products or services. But, if the end goal is to purchase a vendor’s offerings anyways, then why not work a deal with that vendor and pay that vendor the same way that you would have paid a lender for a loan.
Bartering: Bartering is now becoming more acceptable in business given this never ending recession our economy has been in. But, bartering makes a lot of since – especially if you can find a company locally that both offers what you need and will accept your offerings in exchange.
The idea behind bartering is simple. Normally, if you needed something, you would spend your money to buy it. Then, that company would take your money and spend it to buy something it needed. However, if you have what that other company needs and they have what you need – then simply cut out the middle man (money in this case) and just simply exchange products or services with each other. Thus, no money changes hands and no money is needed.
But, what happens if you can’t find a local company that wants your offerings or that has want your small business needs?
The really good news here is that new bartering exchanges have been opening up across the country for the last few years. On these exchanges, you can find nearly any company in the nation to exchange products with and if that company does not want your products, then you can look for a three way exchange with a third company that does.
You don’t really need a business loan or working capital to grow your small company. The fact is that money is only really a middle man between what your business needs. Cut out the middle man– especially if you can’t get a business loan – and simply focus instead on getting the products and services you would have bought with that money (loan).
Plus, by by-passing banks and small business lenders, you could easily reduce some of the costs of doing business. For one, if you can get what you need without outside financing, then you don’t have to pay a lender interest and fees, continually have to report to that lender which eats up your time – time needed to run your business - or have to constantly stress over making monthly loan payments.
Remember; where there is a will, there is a way – that is what being an entrepreneur is all about.
Copyright 2007 - 2013 - Business Money Today - All rights reserved
- Business Loans
- Working Capital
- Start-Up Business
- Business Grants
- Business Credit Cards
- Equipment Loans & Leases
- Commercial Real Estate Loans
- Venture Capital / Angel Capital
- SBA Loans
- Bootstrapping Your Business
- New Small Business Loans For Veterans
- The Best Place To Locate Your Small Business
- 3 Key Factors To Landing An Alternative Business Loan
- When You Can’t Get A Business Loan, What To Do Next
- What Ever Happened To Crowdfunding?
Needing a small working capital line of credit? See the:
Latest Business Credit Card Offers
- Understanding Small Business Lending
- The New Small Business Micro Loan
- Paying For Your Small Business Loan
- 10 Secrets To Getting A Small Business Loan
- 5 Tips To Starting A Business With Little Or No Money