There’s goods news and bad news when it comes to locating startup capital for a new healthcare company. For example, if you own a healthcare vendor business, such as a temporary nurse staffing agency or a medical transcription service, PRN Funding can help fund your company by purchasing your accounts receivable. Selling your invoices to a factoring firm is just one way you can bypass commercial bank’s stricter lending restrictions.
Unfortunately, there is a common misconception that entrepreneurs can tap government grants and interest-free loans to use for their startup companies. The article, Busting the ‘Free Money’ Myth, explains that although the U.S. government gives grants to help with small businesses, most of that money goes to local governments, state agencies and nonprofits–not individuals. The articles also explains that loans coming from the Small Business Administration (SBA) often carry a higher interest rate that a loan from a conventional bank because of the risk involved with a startup company.
Moreover, the article, Little Lenders, shares some interesting statistics supporting the fact that smaller community banks generally are willing to lend money to small businesses as compared to the larger commercial banks. Quoting the president and chief executive of the Independent Community Bankers of America Camden R. Fine, “Community banks focus primarily on small businesses, mom-and-pop operations and consumers because the footprint [of these banks] is a single town or small cluster of towns, they know their customers really well.” Even with their loyalty to the smaller companies, many community banks are still tightening their lending standards because of the credit crunch.
So the bads news is it’s harder to gain access to capital via conventional means. The good news is that there are some alternative way of financing startups. Accounts receivable factoring and payroll funding are just two alternate ways to create a positive business cash flow.
What are some other ways you can think of to help finance your new business?