Alternative Capital Sources
With many small businesses losing their lines of credit, coupled with the demise in small business lending from commercial banks, alternate sources of capital such as purchase-order financing are on the rise, as the New York Times details. For companies with large orders and without hard assets, purchase order financing — and other ways of borrowing against receivables — has become a business necessity. While Entrepreneur Magazine lists some options, many are expensive and can result in higher fees than expected.
Also somewhat overlooked in the scarcity of traditional capital sources is the continued availability of mezzanine debt. Many mezz funds have committed capital, and are actively looking for companies with solid cash flows and strong fundamentals that have been caught in the credit squeeze. While this can be expensive capital, it often prices favorably compared to receivable financing. ClearCreek has relationships with over 100 mezzanine lenders; call us if we can be of help.