GB Ep 20 – How To Cash Flow Your Startup In Times Of Need
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Welcome to another episode of Growth Bites. Today we’re talking about how to secure loans and funding to cash flow your startup. We’ll look at different options to help you manage your cash flow, including raising rounds of funding through startup incubators, taking small business loans, using a line of credit, or factoring your accounts receivable.
- One way to secure funding is through raising seed rounds through a startup incubator or AngelList. [1:30]
- AngelList is a great platform to get introductions to the right people for investing and hiring. [1:44]
- Incubators that can help with startup funding in Los Angeles include StartEngine and Y Combinator. [2:28]
- The other route is securing smaller loans for your startup by [2:45]
- Upstart gives decent interest rates in comparison to other websites or lending companies (4% to 5%), and you can get up to $25,000. [2:53]
- Kabbage has different levels of funding, up to $100,000 depending on your evaluation from your application. The cash can be transferred directly to PayPal, but with higher interest rates. [3:28]
- Lending Club is another option, but also with higher interest rates. [4:48]
- A line of credit helps you with your cash flow management if your clients pay net-60, but you have to pay all your bills within 30 days. [5:00]
- Try to set net terms that favor you and try to negotiate payment terms with your vendors. [5:35]
- A line of credit is an option you can secure with your bank. These can be up to $100,000 or higher. [5:55]
- A line of credit is something you would want to already have established as a financial shield for when things do go awry. [6:15]
- Sometimes bigger banks don’t want to take a risk on startups, so a smaller local bank may be able to give you a better deal because they want your business. [6:40]
- A factoring company takes an amount of your accounts receivable (what people owe you) and factors out the amount you need to make your payments for a small premium. Stores like Walgreens and CVS are factoring all the time. [7:08]
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