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Sources of Finance for SMEs

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Sources of Finance for SMEs

Postby graham662 » Sun 24 Apr 2011 09:16 GMT

Hi,

I recently purchased a business in NJ and am trying to find a source of working capital. It seems banks here don't look at your business performance as in the UK (the business has been going 21 years) but at how much they can cream me for. As I have no credit history I cannot even get a modest line of credit which is a real pain for a business with lumpy cashflow.
Any help or sources of finance in the NY/NJ area would be much appreciated.

Graham
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Postby Kay » Mon 25 Apr 2011 21:55 GMT

Hi Graham and welcome to the forum. Cash flow is a tricky one and something that will sink even potentially good businesses if you don't get it right. If you had the money to purchase the business in the first place I'm a little bit surprised that you didn't take working capital and cash flow into account when you did that.

I don't know anything about the area - NJ - but I do understand business and cash flow so please feel free to ask more questions if you think it might help you.
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Cashflow

Postby graham662 » Tue 26 Apr 2011 08:09 GMT

Hi Kay,

Yes I do understand cashflow having run businesses in the UK for 20 years. In the UK I would go to the bank with info on the business, its history and my history and they would give me an overdraft.
Seems it doesn't work that way in America. Hence the question.

Graham
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Postby Kay » Wed 27 Apr 2011 11:55 GMT

Maybe it does but in the US you are a foreigner without the history, although the business obviously has it.

You might need to get creative and look for alternative sources. This one looks quite innovative http://www.crowdcube.com/ (I've never used it, but it seems to be an interesting idea.) Unfortunately that one is for UK residents only but perhaps you'll be able to find similar for the US.

I know you're looking for a line of credit rather than to raise equity but if you can't raise the credit you may have to consider other ways to fund your lumpy cash flow.

Presumably the previous owner of the business had sources of credit, perhaps from suppliers. I expect you've already looked into all that. If you can't get credit, then maybe you'll have no option other than to raise funds privately or sell equity.
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