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Veteran Owned Business Financing Methods

By Debbie Gregory.  

Are you ready to start your business? If so, you need to think about how you’re going to fund your business. There are many different ways to secure financing, so here are some suggestions. 

  • Equity Financing – is the method of raising capital by securing investors. Think Shark Tank: in return for the investment, the shareholders receive ownership interests in the company. You need to be prepared to give up part ownership of your business. Angel investors, Venture Capital firms (and Sharks) provide not only the capital you need to grow, but often their wisdom and advice can be an invaluable resource to your business. 
  • Debt Financing – is the method of funding your company through business loans. Like any loan, you’re required to pay back that debt plus interest over an agreed-upon amount of time. This method allows you to retain 100% of your company. 

Some loan options include short-term and medium-term loans, equipment financing loans, Invoice financing, SBA loans, line of credit and merchant cash advances.  Below we take a look at them in greater detail.

  • Short-Term Loans – offer smaller amounts in financing usually paid back period ranging from three to eighteen months. These are good options for less-qualified borrowers, but usually have higher interest rates. 
  • Medium-Term Loans – offer a larger amount of capital at a relatively affordable rate. 
  • Equipment Financing – can only be used to purchase new or used equipment. Equipment lenders advance up to a specific percentage of the value of the equipment.  
  • Invoice Financing – is sometimes referred to as contract financing or factoring.  This is an asset-based lending product that allows companies to finance slow-paying accounts receivables through the sale of invoices sold to a factoring company in exchange for an immediate payment. Choose wisely especially if you want to continue to do business with this customer because often these companies will not focus on customer service when collecting the amount owed. 
  • SBA Loans – are loans issued by a traditional bank, but with very low interest rates and guaranteed by the SBA.  
  • Lines of Credit – Provides access to funds that a business owner may draw from whenever they want or need the funds for their business. Interest is only paid on the funds drawn from the line of credit, and only for the time the funds are outstanding. 
  • Merchant Cash Advance – provides a lump sum of capital, that is repaid by allowing the lending company to take a fixed percentage of your daily credit or debit card sales each day until you’ve repaid in full. 

VAMBOA, the Veterans and Military Business Owners Association encourages you to carefully investigate and select the right option for your Veteran Owned Business. 

Veteran and Military Business Owners Association, VAMBOA,