Joe Abraham

Securing bridge financing – a linkedin question

// November 27th, 2009 // Small business

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Q: I need to secure some bridge funding to cover expenses between now and closing on some Angel funding in a few months. Any suggestions?

A: When it comes to securing bridge funding, there are several options I’d recommend you look into. But first, here’s the most important question…

What is this a bridge to?

Is it a 90-120 day bridge funding to pre-approved and contracted funding from a bank or angel investor? If so, securing bridge financing should be a cinch.

If however, it looks more like a “maybe, probably” or a firm “verbal”, then you’re not looking for bridge funding. You are looking to raise traditional working capital.

So I’m going to assume you are calling it bridge funding because on the other side of this bridge is a solid and committed funding event.

In this case consider the following options:

1. Contract Leveraging – I recommend the good folks at Boom Brothers Commercial Capital.

2. The Receivables Exchange

3. Your law firm and/or accounting firm. Get them to leverage their rolodex. If not, fire em and find a firm that will.

4. Friends and family – do the people around you believe in you?

5. Traditional bank financing – if you have the 2x in assets to pledge for a short term not.

6. Non-traditional bank financing (my favorite) – Local high-net-worth business men/women. Consider even working with your suppliers, vendors and clients.

If none of those are an option for you, or if you cannot get good traction, then consider one or both of the following:

1. Increasing revenues – retail industry does this all the time – do an inventory blow out.
2. Decreasing costs – owners and key staff may need to take a significant cut in lieu of payback in the future. Some may even want to invest in the company. Talk to an attorney who specializes in business law to decided whether to structure it as debt or equity financing. But make sure you have developed a new and fresh strategic plan/business plan if you intend to engage any of the sources above.

The bottom line? There’s plenty of money out there for the right entrepreneur…even in a tough economy.

Go get it!

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