I’ve become convinced, as I’m doing my research, that we don’t need anymore government programs. Everything people need to thrive is in place. The Small Business Administration provides an astounding array of financial and technical support programs.

The SBA will help you write business plans, help you develop financing, teach you about credit, and help you develop management and marketing skills. All you have to do is look in yellow pages to get in touch with an SBA representative. The USDA provides finances for rural business development and many times works together with SBA.

Instead of more programs, we need ways to instill people with motivation, patience, passion, and long term discipline to pursue their dreams. Long term welfare creates dependence. Empowerment creates independence. You choose.

Trade Credit One of largest sources of short-tem financing, trade credit occurs whenever you purchase from a supplier but do not need to pay for merchandise for 30 days (or whatever terms are). Trade credit can be expensive if you are foregoing discounts, but a new firm may not have much of a choice.

Factoring Factoring is also a popular source of financing for growing firms. When you generate a receivable you may sell it to a factor who will then collect receivable for you. Typically, you will get between 75%-90% upfront for receivable and remainder when factor collects, less a fee.

Asset Based Lending Asset based lenders will lend to businesses that lack sufficient cash flow to support unsecured financing, but have sufficient assets that can serve as collateral. Typically, assets are accounts receivable and inventory, but can be equipment or other similar assets. The lender relies on assets to repay loan, not cash flow of firm. Fast growing firms who cannot get sufficient financing from a financial institution will be a typical client of an asset based lender.

Mezzanine Financing Mezzanine financing is subordinated debt, a type of hybrid between senior debt and equity. As Mezzanine financing is typically high risk, it can be expensive. A typical target company generally has been in business for a number of years and has an established revenue base and positive cash flow stream. Often, a company may have reached its maximum level of financing from a lending institution and will obtain mezzanine financing to bridge gap and finance their growth. The Mezzanine financer will subordinate its debt to main lender.

Banks By time a firm can approach a bank they usually have been in business for a couple of years, have developed solid revenue, are earning profits and have a reasonable balance sheet. The bank will provide daily operational financing as well as long-term financing. Generally cheapest form of financing, it can also be hardest to get.