When traditional types of debt or equity financing aren’t available, businesses can sometimes look within their own operation to find sources of funding. Typically this type of funding is available for established businesses currently in operation and looking to expand, as opposed to start-up companies looking for funding to get up and running.
A look within the company financials show potential funding opportunities related to accounts receivables (Factoring), purchase orders (Purchase Order Financing), inventory (Inventory Loans), and monthly income (Revenue-Based Financing). Each of these areas within the business offers a potential avenue for securing funds different from the traditional debt and equity models of funding.
Factoring allows a company to sell their outstanding invoices to a third party in order to receive immediate cash. Purchase order financing provides a means of financing for companies that have customer orders but lack the capital required to purchase the necessary supplies to fill the order. Inventory loans allow companies to secure funding based on current inventory or inventory purchases which can be used as collateral. And finally, Revenue-Based financing, a unique hybrid between debt and equity financing, allows owners to sell a portion of their future revenue stream while retaining full ownership of the company.
Company expansion also often relies on the purchase of new equipment to stay competitive and gain efficiencies. Companies looking to make these types of expansion purchases may be able to capitalize on equipment financing options.