Author: Blake Brown
Blake is a member of the business growth team at EquityNet.
Hiring employees is one of the most impactful decision business owners will make. While good hires can positively impact cash flow, there is always a ramp-up period in which your business will need to meet payroll. This diminished cash flow can restrict other revenue generating activities. By planning ahead and securing financing options prior to hiring, you can meet payroll without leaving your business strapped for cash.
Many business owners find that traditional funding sources are not keen to provide financing to ramp-up hiring. You cannot use new hires as collateral, new hires are not guaranteed to improve financial health, and lenders have a hard time calculating the value of a new employee.
In other words, no matter how great your new employee is, banks will consider them only as an expense on the balance sheet. Capital providers are unlikely to change this stance, but it is a common situation that confronts small business owners. Our team has helped many entrepreneurs solve this exact problem - so what are your options?
Secure a loan with company assets. The assets could include real estate, equipment, outstanding accounts receivable, purchase orders, work orders, inked contracts, and more.
Refinance your existing capital structure. We have helped many entrepreneurs restructure their business’s financial infrastructure. Often, business owners have collateralized all of their assets and believe they will not qualify for a loan. By refinancing your capital structure, you can free up assets and reduce your debt financing costs. While there are countless variations of this scenario, it is a remarkably common situation for small business owners to be in. By providing our team with some information on the form above, we can tailor a plan to help you get working capital to hire new employees.
Secure a loan with personal assets. Using personal assets is a risky approach, so I would not recommend it for most entrepreneurs. No personal assets should be used to secure a business loan that you are not comfortable losing.
Find an Equity investor. Often existing business partners, friends, or family are the best source for this. In addition, you can leverage our network of 3,000+ equity investors.
It is vital to have cash on hand when you have found a great new hire - they can be hard to come by. By working with our team, we can help you get the financing you need, often in the matter of weeks. You can get started by providing us details on your business on the form above.