The Most Common Types of Financing Available on the Market for your Business

Agriculture & Farming Brewing Small Business Financing Small Business Insights & Tips

Do Business Smarter

By Angela Faringhy, Innovative Lease Services, Inc.

Let’s talk about money. In order for your agricultural and wine business to grow – sufficient funds are needed to take on projects, making purchases and expanding your operations to become more efficient and in turn make more money. It sounds so simple, right?

Business owners, both small and large, often go to banks for financial assistance. While banks are one avenue for support, they are not the only establishment. I am here to share with you the most common types of financing you’ll come across and whom you can get them from.

As commercial financing experts working in the industry for over 30 years, we would like to share with you the most common and beneficial financing programs out there on the market for small to medium sized businesses. From cold cash to needing to purchase equipment to restocking inventory and supplies – discover which financing product closely matches your business’s needs.

Equipment Financing and Leasing – How to get new equipment  

When the situation arises where your business needs to purchase equipment, you don’t have to pay cash to buy it outright, you can finance it. Tractors, stainless steel tanks, destemmers, computer systems and items like table and chairs are all examples of equipment that doesn’t need to be updated frequently and therefore can easily be financed, under the product name, Equipment Financing.

The entity supplying the funding (also known as a Lender) basically purchases the equipment from the supplier and rents the equipment back to the Lessee (your business) for a low monthly fee. At the end of the lease the Lessee has the option to purchase the equipment for as little as $1 or start a new lease for the latest and greatest equipment models. Leases range from 12-72 month terms and can include seasonal payment provisions to help match the cash flows of your business.

By leasing your equipment you also preserve your cash and pay for the equipment over the life of its use. Example a new high producing destemmer costs $40,000 or three new oak casks will come in close to $55,000. It’s hard to fork over the dough when your business is tight on funds. With Equipment Financing you can invest your saved money into other facets of the business or keep safe for future endeavors.

Where to get Equipment Financing: Shop Private Lenders or local credit unions for best programs.

Working Capital Loans – How to get cold cash

Loans are one of the most common forms of business financing. The Working Capital Loan is designed as a short-term solution for those businesses in need of money to help run operations on any scale.

Whether you need to meet routine expenses or pay for new business endeavors, the Business loan is essentially a cash infusion into your bank account that can be used for literally any business expense.

Most commonly working capital is used for growth, debt and inventory (just one or a mix of all 3).

Growth – Utilize capital to expand operations, create a new product line or launch a marketing campaign to drive more sales.

Debt – Use funds to pay delinquent taxes or pre-pay taxes, cover payroll needs, or pay off any other form of high interest debt the business has collected.

Inventory – Stock up on goods that contribute to your bottom line such as; brand new bottles, yeast, boxes, oak barrels, supplies, wine club swag etc. Where to get a business loan: Lenders, banks and the SBA (application process to qualify).

Invoice Factoring – Also known as the cash advance

Having seasonal cash flow fluctuations can be a major issue when trying to grow a business. What I mean by this is if a business invoices a customer and in turn gets paid weeks after services are rendered or goods are shipped, there is a lack of consistent cash flow or immediate exchange of money for services. That business will still have to pay up front for supplies and labor, but the valuable cash flow is tied up in invoices leaving the bank account empty. One effective way to solve the cash flow crunch is with Invoice Factoring.

Invoice factoring is simple in how it works:

  1. You sell your invoices to a factoring finance provider (like ILS).
  2. Factoring provider advances you up to 95% of the invoice amount in 24 hours or as quick as same day.
  3. Factoring provider collects full invoice amount from your customer(s).
  4. Once your customer pays the factoring company (1 week- 6 months etc.) You get the remaining balance (minus a small factoring fee).

Many companies that often invoice other businesses have found invoice factoring to be an effective and consistent financial strategy for their business – keep reading to learn why.
Unexpected Expenses

Just about every business faces the surprise and stress of an unexpected cost and there isn’t enough cash on hand to manage. Invoice Factoring allows a business to quickly cover those unexpected costs.

Extension of Billing Department

It is common for back offices to struggle with keeping up on billing and collecting from customers. Or if your accounting department isn’t effective in making sure payments are received on time. Many Invoice Factoring partners act as an extension of your billing department so you can eliminate a headache of chasing down payments and focus on other things.

Essentially a cash advance, it’s your money you are just getting it faster!

Where to get Invoice Factoring: Specific Lenders whom offer Invoice Factoring Programs

You may be wondering what about investors, angel funds, cash advances, lines of credit, etc. We have not listed those as we find our customers often come to us in distress after taking on this type of obligation. There are many setbacks with giving away a portion or selling your soul to investors. Also, opening up to many business lines of credit (credit cards), can be a very dark hole to try and climb out of.

Equipment Financing, Working Capital Loans, and Invoice Factoring all have some commonalities and that is they each save your business thousands in capital, apply and receive funding as quick as same week, and most importantly save you from some serious financial mishaps that you may not be able to recover from.

Given that every business is unique, make sure to first consider all of your needs and options. We are a commercial lender and provide custom Equipment Financing Programs, Working Capital Loans and Invoice Factoring Programs. We are available for a free consultation to help you discover what business financing product fits your business needs. For more information visit Innovative Lease Services, Inc. online at www.ilslease.com or give us a call at 800-438-1470.