Chances of being able to secure a bank loan or any other credit facility for that matter as a new company are quite low. Banks generally do not trust new companies; they usually view them as high risk.
There is usually no guarantee that the business will take off and actually survive the market. Banks are usually very skeptical as they can never be sure whetherthe business will survive the market long enough to make enough money to pay back the loan that will be advanced to them. For this reason, there are so many startups that struggle to make it in business.
Financing is a very important part of business. The ability to finance day to day operations is a very important thing. Without this ability, the business will not be able to meet and satisfy the needs of its customers. This will in turn result in reduced sales which will eventually impact on the revenue and if nothing is done to salvage the situation in good time it can actually lead to the business closing down.
There are times when situations arise in business that require a lump sum of cash to handle. For a business to be able to deal with such situations, cash flow becomes a very important factor. It is very important that cash flow be maintained at a good level if a business is to survive these harsh tides that will come its way.
The lack of trust form the banks should however not deter new business owners. This is for the simple reason that you have the option to factor invoices. There are quiet6 a large number of factoring companies operating in the market that will not shy away from new businesses the same way that banks do. Getting into an arrangement with any of these companies to factor invoices will have the effect of ensuring that the business always has a good amount of cash flow on the ready.
The factoring company will be able to pay your business cash for all the invoices owed to you thus you need not wait for when your debtor will be able to settle you. This will mean that you will have enough money on the ready to handle all obligations as and when they fall due. Granted you will incur a small cost but it cannot be compared to the cost of interest that you will be charged at the bank or the cost of losing businesses for lack of cash flow.