Tapping Your Suppliers

After the major sources of financing are in place, don’t overlook your suppliers for some additional help. Almost everyone who sells something to your business can be called upon for special terms if you decide to make the effort of involving them.

Equipment vendors are the most common source – leasing equipment often makes sense for cash-starved business buyers. The rates of interest will most likely exceed 13%, but, you can often get 100% financing this way. Leasing companies can also create cash for you. Sometimes, they will buy your used equipment and lease it back to you.

Another common way to create working capital is to ask suppliers to stretch the interest-free period before you have to pay their bills. In many businesses, running 30, 60 or even 90 days behind on a regular basis can create quite a large working capital account!

Source : Glen Cooper, CBA, is a Certified Business Appraiser and is President of Maine Business Brokers

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