Sources of finance for bootstrappers

Filed in archive How-to on June 21, 2006

I meant to post this link a while ago then found it again the other day when going through my "favorites".

Excerpted from the Small Business Encyclopedia, here are six possible sources of financing for the bootstrap entrepreneur that may not be for everyone depending on the limitations of your resources.

Some of the suggestions could appeal, however, to someone trying to expand an existing business without going into debt. Recommendations include:

• Negotiating "trade credit" with suppliers giving you a longer period to pay for what you buy without interest

• "Factoring" or selling your accounts receivable to a finance company at a discount and letting them handle collection

• Getting a customer to write a letter of credit when placing an order to be used as security when purchasing from suppliers

• Leasing instead of buying any facility you require or financing it with a long-term specially structured payment plan

• Paying for your equipment over time instead of purchasing it outright

• Leasing everything from copier machines to company cars instead of purchasing them (This can be difficult nowadays since companies like Xerox sometimes refuse to lease to a new account)

Benefits of this approach include more equity and less debt for your business giving it greater worth in the long run, according to the link.