Whether your staffing agency is starting up or growing, sufficient and steady cash flow is needed. Here is a list of 3 ways to finance staffing agencies.
Business loans are a common way for companies to get capital. When you go to a bank, you will need to apply, qualify and get approved for a specific amount. Sometimes it can take a few months after approval to actually get the cash you need. Since you also have a limit on the amount you were approved for, it might be difficult to get more cash in the future because it creates debt on your balance sheet. The funding is secured by your corporate assets – and sometimes even your personal assets. Monthly interest is paid usually with a rate of around 3 to 5 percent.
Factoring and payroll funding is becoming a more common way to finance staffing agencies. There are several benefits for staffing agency factoring.
Many times when people are looking for investors, they think to ask friends and family first. Although they might be willing to invest, it is always good to think twice, maybe even three or four times about this. It can be difficult when money comes between friends and family – especially if your business doesn’t go as planned. You can also look into angel investors. Angel investors are professionals who are willing to invest money in your business. In return, they will want some type of profit sharing, a percentage of the company, or their money paid back with interest. The good news is you will have the cash for your business to grow it, but the bad news is that most likely you will be giving up a percentage of your business.
If you decide to go the route of getting investors, make sure you have something good to present to gain their interest. In this article from entrepreneur.com, it explains five of the worst mistakes entrepreneurs make when pitching to angel investors.
Whether you decide a business loan, factoring or investors is the right way to finance your staffing agency, make sure to do your research and weigh out all of your options. If you have questions about factoring for staffing agencies, contact Scale Funding or call 800-707-4845.