Financing: A Critical Need For Many Fledgling Businesses

Financing: A Critical Need For Many Fledgling Businesses

There’s a looming Catch-22 scenario applicable for many would-be business startups and entrepreneurs in Arizona and across the country.

And that is this: They need money to spark their creative ideas and initially grow their businesses, but they don’t have the necessary funds to do so precisely because they haven’t yet realized profits from the goods or services they sell.

And that leads to a flatly thorny issue for many just-starting enterprises, which is this: Where will capital infusion come from?

What sources can be tapped to supply the funding necessary to take a new or growing business to the next level?

As noted in a recent Arizona news article on funding limitations and options for small and medium-sized businesses, while banks are an obvious first-instance financing option, they are far from being uniformly receptive to business principals with an unproven track record. Lending officials are often “not able to see the paper-trail they would need to approve a loan.”

That leaves a universe of alternative lenders willing to take a calculated risk, which can be a bit of a slippery slope for both a business debtor and financing entity. On the one hand, a business idea might not pan out. On the other hand, a company owner might have to pay higher-than-average interest to a lender to take a financing risk.

Still, things can — and often do — work out well for both parties, with such alternative-financing arrangements often being welcomed for the funding flow they provide.

One Arizona financing program for newer and smaller businesses has recently gained traction. The so-called Access to Capital Initiative is an online clearinghouse of more than 30 lenders that are willing to make loans to select customers. The initiative has gained support from the Arizona Chamber of Commerce.

Loans are, of course, adjusted for risk, meaning that borrowers can fully expect to pay more in interest charges than they would to traditional banks.

Financing is often of crucial importance for a start-up or recently established business. A proven commercial attorney can offer advice and help company principals explore their options in this important sphere, as well as provide diligent representation across the universe of important business considerations for growing companies.

Call Cook & Price, PLC today at 480-407-4440 or email us through this website.

2017-09-28T06:03:21-07:00 June 14th, 2016|Categories: Business Litigation|Tags: |

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