When any business is build out of very little or no finance borrowed from outside source, then it is called Bootstrap Financing. For outside lenders, it is a means to raise money and also for business owner, it is most economical means to create capital. Your business also becomes quite valuable as almost no money was borrowed for it and therefore you need not give up any equity. Also you are free from paying any interest as money was generated from the business itself. There are number of Bootstrap Financing available
Factoring
When you use your own share of funds. You generate cash flow, by selling them to a “Factor” at a discounted price. Trade Credit – When you can get vendor or supplier to give credit for different set of term e.g. 30, 60, 90 days terms. If you can generate cash by selling before that agreed time without taking from company’s cash.
- Customer - By using letter of credit from customer, which can be used for generating cash without using any cash from the company’s business.
- Real Estate – By Leasing, refinancing, and borrowing against company’s equity or any other asset of the company.
- Leasing – By leasing equipment.
