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Return to Home Page Return to Business Loans Return to Financing New Business Short Term Business Finance AlternativesMany businesses need short term finance from time to time. It is important to expect this and plan for it. If the short term finance needs of your business are beyond your regular facilities, then an alternative solution can be found. There seems to be endless scope for creativity and imagination in this area of finance. Below are some examples of what can be done, including some real-life New Zealand ones. A lot of short term business finance is not in fact 'loans' at all, but rather purchasing of contracts or other paper assets, or ways for people with capital to invest in businesses and share the profits without taking a shareholding. Enquire about short term finance for your business Invoice DiscountingBriefly, a version of factoring ideal for rapid growth contractors or anyone with a short term cash problem who invoices out work. This type of financing is covered in depth elsewhere on the site. Follow the link for comprehensive information about invoice discounting.Discounting a GST Rebate.Normally no-one would purchase an expected GST rebate (although I am quite frequently asked). The IRD would never guarantee that they were going to pay anyone a given rebate. On one occasion, however, a deal was put together for a property developer which involved him paying for a rock solid guarantee from a firm which underwrites business transactions. This enabled him to raise a substantial amount of finance against the GST rebate that he would receive following a significant property purchase. This short term finance enabled him to produce the deposit that unlocked the main financing which he had already negotiated.Discounting a Real Estate Sale and Purhcase Agreement.Another real-estate possibility is to sell a sale and purchase agreement on a given property. If there is an unconditional contract and the purchaser has paid a deposit, then, potentially, finance could be arranged. This situation can work for spec builders/developers who have run out cash towards the end of a project but have a firm buyer. They have to be willing to discount their margin on the project, but it can be a better option than failing to complete the building.Short Term Investment BondsSuits businesses which can make significant short term profits but need up front capital to fund same. The bond could be for as short a time as a week or as long as a few months. Essentially, the bond investor gets a slice of the profits in return for providing the necessary liquidity for the business. As with invoice discounting, it's like having an angel investor for your business without having to sacrifice any ownership.Discounting Future Credit Card ReceiptsI am only aware of this being available in the US at present, and my tentative enquiries suggest it can’t be done here yet. Please let me know if I’m wrong. The deal is that capital is provided to a cash business, e.g. gift shop, restaurant, etc that wants working capital to grow. If they can demonstrate that a percentage of their turnover is paid by credit card, then a system can be put in place whereby a percentage of every sale gets diverted to the financier. The quicker it’s paid off the cheaper it is, but if turnover ends up being less than expected, the repayments can be stretched out. A contract is drawn up involving the credit card company.Artificial Middle ManAnother alternative for retailers. This model has the financier purchasing goods on behalf of the retailer, who then sells them on a sale or return basis. Click hereReturn to Home Page Return to Business Loans Return to Financing New Business Contact
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