Most small business owners understand that there likely will be a need to secure working capital at one point or another throughout the history of the company. Whether that be the new machine shop that is just trying to get started or the contractor that has been in business for over 30 years that is trying to expand on their service offerings or looking to buy a new truck. But who can a small business owner turn to in order to secure these much needed funds? Depending on where a small business is in terms of development, financing options become easier to come by the longer the company has been in operations.
Small business owners that are just starting out certainly realize that obtaining financing can be a struggle. Even after a business has survived for a year or two, small business owners still often struggle to find capital from traditional lending sources such as banks and credit unions. This is often due to these lending institutions having very strict requirements and more so, not feeling comfortable in the business’ ability to pay the funds back due to the lack of borrowing history available, among other factors.
So where can a start up go to secure financing? Outside of using personal funds, borrowing from friends and family, small businesses often turn to applying for microloans (through the SBA or government lenders), asset-based financing options, small business grants or credit cards.
But once a small business starts generating consistent revenue over the course of several months to a year or so later, they may begin to qualify for 
loans from certain alternative (non-bank) lending sources that require a business to generate at least $350,000 per year, while requiring them to have been in operations for at least six months to a year. It should be noted that lending sources that provide financing to small businesses that either have been operating for less than a year, have lower monthly revenue (under $10,000) or the owner’s personal FICO score is on the lower side (sub-600), among other factors, these lenders often include higher borrowing costs compared to lenders that have more strict requirements.
But as more time goes by and the business continues to generate revenue, small businesses reach the growth stage, and at this point, they continue to gain access to additional funding resources (including those lenders that require the business to be in operations for at least two to three years, while generating at least $500,000 per year).
Then, once a small business has established itself in the industry, while continuously generating steady income year over year for several years, they may be ready to expand on their service offerings in order to continue to grow. A small business in this stage can potentially qualify for financing via those lending sources that have even tighter requirements (such as needing at least three years in business, along with a higher personal FICO score (at least 650 or above) and higher minimum monthly revenue (at least $10,000) in their bank statements, among other requirements). At this point, these small businesses can now also potentially qualify for financing through traditional lending sources such as banks and credit unions. It should be noted that each lending institution has their own requirements and guidelines so it is recommended that small business owners conduct research on the particular lending source prior to applying in order to ensure they can potentially be approved.
Penhurst Capital specializes in assisting small business owners in each stage of business development to secure various financing options such as merchant cash advances, term loans, lines of credit, SBA loans and equipment financing solutions, among others. Penhurst Capital has assisted a wide variety of businesses including start ups, companies looking to expand on service offerings and others that needed to cover payroll expenses. If your small business is in need of working capital solutions for any reason, consider reaching out to Penhurst Capital today.
