Financing Strategies for Smaller “Underserved” Businesses

With access to bank financing still limited for many companies, US Capital Partners can help small and medium-sized businesses secure the alternative financing they need to thrive.

Perception of ease for difficulty of raising new external debt financingAbout two-thirds of smaller companies characterize the current business environment as difficult for raising new debt financing, according to a survey of almost 2,500 businesses. About 62% of respondents indicated a need for external financing due to working capital fluctuations, 62% due to planned growth or expansion, and 56% due to increased demand already realized.

Unfortunately, the research also shows that many business owners are tapping into their personal assets to fill financing gaps, with 37% saying they transferred personal assets to their business over the last three months. Often, this occurs after business owners are turned down by traditional lenders and don’t know where to turn.

Leveraging Your Credit Score

Traditional banks rely primarily on credit-worthiness to determine whether, how much, and at what cost to lend to your business. Unfortunately, the application-to-loan ratio for smaller businesses can be fairly low. With mounting pressure from regulators, banks have gradually been tightening commercial lending standards.

Leveraging Your Collateral Assets

Many smaller businesses fall outside the parameters of traditional bank financing. Thankfully, alternative lenders like US Capital Partners can provide accounts receivable financing, machinery and equipment loans, purchase order financing, inventory loans, and much more. This type of financing, known as asset-based lending, or ABL, continues to be on the sharp increase.

Many small businesses don’t appreciate the sheer extent to which they can leverage their business assets to secure funding. ABL is affordable and offers flexible loan structures. Loans come with fewer financial covenants than bank loans, and close more quickly than most other financing methods. ABL lenders focus on collateral rather than credit-worthiness, and therefore offer an alternative to traditional bank financing.

Leveraging Your Cash Flow

Smaller businesses may not always have large inventories, receivables, or fixed assets, though. This can make it difficult for them to secure traditional ABL. Nonetheless, these companies often have strong cash-flow margins and enterprise value. Typical examples include service companies and high-tech companies.

“Many businesses are in their early stages, and may not have many years of historical performance,” explains Jeffrey Sweeney, Chairman and CEO at US Capital Partners. “Traditional banks may therefore be hesitant to lend to them. However, US Capital Partners offers cash-flow term loans to such businesses, even if they have less than $5 million in trailing EBITDA—which used to be the threshold for such loans. At US Capital Partners, we can help smaller businesses leverage their cash flow to get the financing they need to grow.”

To learn more about how your business can secure the funding it needs, email Jeffrey Sweeney, Chairman and CEO, at or call +1 (415) 889-1010.

Jeffrey Sweeney