Bootstrap Financing for Businesses

When companies are low on funds, whether in start-up mode or a few years in, they start searching for alternative ways to improve their cash-flow. One of the most common ways to gain a little extra moolah is through small business loans.

The drawbacks to these loans are interest and collateral. Many businesses don't realize there are alternative ways to fund their compaines, with less risk and potential debt.

The organic craze has everyone in a tizzy. People all over the world are incorporating the organic lifestyle into their everyday routine via food, household products, clothing and a number of other sources. Now there is even a way to extend it into business with a little process called Bootstrap Financing.

Bootstrap financing is defined as "the process of growing a business more or less organically, without using significant outside sources of capital," by Steve Martin author of Instant Profits: Making Your Business Pay. It's not only a great technique for start-up companies, but for small to medium sized businesses in need of financial aid as well.

Under the term Bootstrap Financing there are five main types: Trade Credit, Leasing, Real Estate, Customers and Factoring.

• Trade Credit focuses on a vendor agreement allowing your company to receive goods and generate cash before your payment is due.
  
• If the funds to make a large payment on space or equipment are not available, leasing is a great solution in lieu of making large purchases.
  
• Companies that hold real estate may be able to borrow against, rent or refinance to make the most of existing assets.
  
• A customer is permitted to write a letter of credit, stating they will buy X amount of products from you, and in turn suppliers will allow you to purchase materials to manufacture the products using the letter of credit as collateral.
  
• Companies in need of immediate cash can take part in factoring, the process of selling accounts receivables for a percentage of the actual cost.

These procedures allow businesses to use what they've got to get ahead and leave loans as a plan "B". While there is nothing wrong with borrowing money, we have all done it once or twice before, there is a great satisfaction that comes with being debt free and doing it yourself.

To explore your financial and factoring options please contact us or visit our web site. We would love to help you explore alternative options for funding your company.

Contact us to open a dialog about your company's needs.

So what? Wells Fargo & Other Thoughts

We heard this week that bailed out mega-bank Wells Fargo made a profit in the first quarter of this year. Big whoop! Let's see, they borrow money at 0% and loan it out to people using their credit cards at 15 to 21% or more. How could you not make money? Any kid running a lemonade stand knows that you can make money with that deal.

The questions remain, "what is on their balance sheet?'' Hmmm, credit card accounts that will default soon perhaps? More bad mortgages? All kinds of credit derivatives?

So what happens when any of these items begin to go "belly up"? What happens if they lose big amounts of money in 2009 (in the billions)? Well we all know that they are "too big to fail" and our benevolent federal government will continue to prop up any zombie company (with our money) they believe falls into that category.

Enough is enough! Let the Tea Parties begin. You cannot solve a debt crisis with more debt! Let your representatives in Washington know that you have had enough of the spending that can never be paid off in our lifetime or that of our children and perhaps that of our grandchildren These policies are immoral and will only lead to more economic troubles ahead. And it is time to abolish the Federal Reserve!

The market must correct itself no matter what the duo of Tim & Ben think. They cannot throw more of our money at the problem and make it go away. They can only kick the can down the road which will make coming out of this economic downturn that more painful by prolonging the problem and even making it worse like Hoover and Roosevelt did during the Great Depression.

Success Stories

As we start our 4th year in business as an Interface Financial Group office we find ourselves thinking about the clients that we have worked with to this point. We'd like to take this opportunity to share some of our experiences. First, our clients come to us through referrals. We could not have grown our business and helped our clients grow their businesses without good referral partners. If you are one of those referral partners who trust us enough to make a referral to us, we THANK YOU.


Our clients say it best.

"Thank you for your service, we are able to keep moving and my stress level has dropped big time."

*****

"Jim, I wanted to take the time to say I appreciate you and the assistance from Interface Financial. Working with you and Connie has been a true pleasure and an absolute blessing for our growing business. I will pass your name on to colleagues, but I just wanted to say thanks for all of the hard work and effort you put toward helping us get to the next level."

*****

"Thanks again for what you allow our company to do - continue when times get tough and we are continuing to grow. You and Jim are awesome!"

*****

Our clients have a wide variety of businesses and their funding needs are just as varied. Here's just a partial list of the types of businesses that our clients operate:

Heating & Cooling Subcontracting
Freight Expediting
Contract Electronics Manufacturing
Metal Fabrication
Plumbing Supply House
Commercial Cleaning
Snow Plowing

Our smaller clients' funding needs may be less than $10,000 a month, while a large client may need more than $100,000 in one transaction. Some clients have used us weekly while others have used us just a handful of times. They all appreciate the fact that IFG's Invoice Discounting service is truly "use it as needed." While our clients have all needed the same thing, CASH, the reasons that they needed it is varied. The most common reason that they sell invoices to IFG is to obtain the cash that they need to make payroll. We have one client that sells invoices to us when he needs cash to buy equipment at auctions. Several clients have been able to obtain cash discounts or quantity discounts from their suppliers. After her first funding transaction with IFG, a client was thrilled that she not only had enough cash to qualify for a quantity discount on her supplies but the amount of money that she saved with this discount was more than IFG's fees! This is an example of how IFG really can help a small business grow. When we're asked, "What do you do at The Interface Financial Group?", our response is, "We provide working capital for small businesses." But we could say, "We provide stress relief." Our clients tell us repeatedly that it is such a relief to know that they can get the cash that they need to run their business. One client even went so far as to say that we saved his marriage. IFG has eliminated the fights that he and his wife would have regarding how they were going to make payroll. We hope that this has given you some insight into what IFG's Invoice Discounting service has meant to the clients that we serve. And since our business comes from referrals from you, you too have been a part of the success or our clients. Again, thank you for those referrals. Please continue to refer to us those businesses that you find that are experiencing cash flow problems.

Let us help the people you know find success. If you know anyone who could use advice or help financing their business please pass our information along.

hayes@interfacefinancial.com / Office Phone: 765-868-7030