BlogCommercial Finance

The Business Funding Lifecycle

By 12.01.20December 3rd, 2020No Comments

David Zimmerman, Business Development Officer at eCapital Commercial Finance, has worked in commercial finance for over 20 years helping small to mid-market companies get the funding they need to thrive. In this interview, David discusses the stages of the Business Funding Lifecycle and the financial solutions available as your business develops.

From start-ups to mature companies, find the right financial solution for your business.

Knowing your company’s place within the business lifecycle is much simpler than identifying what funding options are your best bet at each stage. From pre-revenue to post-revenue, growth mode to exit, how you finance your business along the way can make all the difference. David Zimmerman, Business Development Officer at eCapital Commercial Finance, partners with businesses at every stage in the lifecycle to find them the right financing to meet their goals.

Q: What are the stages in the Business Funding Lifecycle?

David Zimmerman: The stages of the Business Funding Lifecycle are the same as those in a traditional Business Lifecycle – Seed/Launch, Start-up, Growth, Expansion and Maturity/Exit. What’s different about the Funding Lifecycle is that in addition to looking at a company’s revenue over time, it also takes into account the risk of providing capital and the likely investment sources at each stage.

Q: So, knowing where your company fits within the Business Funding Lifecycle helps identify what types of financing you are most likely to qualify for?

DZ: Yes, and not only what your business may qualify for but also what financial solutions add the most value and minimize your risk. For example, a start-up with one to two years of operating history would be categorized as high risk and find it nearly impossible to obtain traditional financing. However, a financial solution such as invoice factoring evaluates risk based on the customer’s ability to pay, not the business’ credit worthiness.

Managing cash reserves is one of the biggest challenges in the start-up phase. Accounts receivable factoring gives start-up businesses fast access to working capital without the lengthy application process and financial covenants that accompany bank loans.

Q: What about a company in the growth stage that has invested heavily in equipment and does not have the cash reserves to expand?

DZ: It’s common for businesses to look for financing solutions when it comes time to expand into new markets or offer new products and services. Investing in equipment to allow for expansion can tie up working capital, leaving the business without the funds it needs to operate efficiently.

Looking into an asset based lending solution or using the Small Business Association’s Lender Match for business loans are good options for businesses facing obstacles to growth.

Q:  Is there a need for mature businesses to seek financing?

Of course. Although mature businesses typically have the easiest access to debt capital, the type of solution they choose should be influenced by the goal they are trying to achieve. Have sales declined? Is there a need to diversify? Is a merger or acquisition being considered? Can they afford to take on more debt to fund their objective? The answers to these questions will determine the type of financial solution that best suits their needs.

Q: What is the single most important takeaway about the Business Funding Lifecycle?

DZ: Know your business and know your options. In my 20+ years of working with businesses in a wide range of industries, I have never seen the same circumstances twice. The lifecycle of your business will not fit neatly into any particular mold, and the right financial partner will help you uncover the best way to fund your goals.

Thank you to David Zimmerman for sharing his thoughts on funding at every stage of the business lifecycle. If you would like more information about the financing options available for your business, please call David at (866) 517-5260.

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