The BizFilings blog covering business tips and trends.
Financing Options for Independence-Minded Entrepreneurs
Published on Feb 18, 2011
Read 'Financing Options for Independence-Minded Entrepreneurs' at 'Time to Start Up,' the small business blog by BizFilings.
Small business confidence has been growing steadily in recent months, reaching levels unseen since before the recession, while borrowing throughout the sector has also grown. A recent report from Thomson Reuters and PayNet found lending grew by 20 percent from November to December of last year.
As these trends are only expected to accelerate in coming months, startups and entrepreneurs forming an LLC will need to adopt financing strategies that place them above their competitors.
Once such method, so-called "royalty financing," has been a particularly popular method in recent months, as it allows borrowers to pay off credit according to the business' revenue streams, so when there's a slow month, the borrower is not forced to pay the same flat fee.
Entrepreneurs may also want to consider bootstrap financing, which, like royalty credit, allows entrepreneurs to retain full ownership and equity over their company.
"Since bootstrapping requires plowing business profits back into the company rather than taking them home, you'll be amazed at the degree of focus you'll exude," writes Brad Sugars in Entrepreneur magazine. "Building your business this way necessarily requires keeping expenses low and establishing optimal target markets."