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There are several potential financing options available to cash-strapped businesses that need a healthy dose of working capital. A bank loan or line of credit is often the first option that owners think of – and for businesses that qualify, this may be the best option.

In today’s uncertain business, economic and regulatory environment, qualifying for a bank loan can be difficult – especially for start-up companies and those that have experienced any type of financial difficulty. Sometimes, owners of businesses that don’t qualify for a bank loan decide that seeking venture capital or bringing on equity investors are other viable options.

But are they really? While there are some potential benefits to bringing venture capital and so-called “angel” investors into your business, there are drawbacks as well. Unfortunately, owners sometimes don’t think about these drawbacks until the ink has dried on a contract with a venture capitalist or angel investor – and it’s too late to back out of the deal.

Different Types of Financing

One problem with bringing in equity investors to help provide a working capital boost is that working capital and equity are really two different types of financing.

Working capital – or the money that is used to pay business expenses incurred during the time lag until cash from sales (or accounts receivable) is collected – is short-term in nature, so it should be financed via a short-term financing tool. Equity, however, should generally be used to finance rapid growth, business expansion, acquisitions or the purchase of long-term assets, which are defined as assets that are repaid over more than one 12-month business cycle.

But the biggest drawback to bringing equity investors into your business is a potential loss of control. When you sell equity (or shares) in your business to venture capitalists or angels, you are giving up a percentage of ownership in your business, and you may be doing so at an inopportune time. With this dilution of ownership most often comes a loss of control over some or all of the most important business decisions that must be made.

Sometimes, owners are enticed to sell equity by the fact that there is little (if any) out-of-pocket expense. Unlike debt financing, you don’t usually pay interest with equity financing. The equity investor gains its return via the ownership stake gained in your business. But the long-term “cost” of selling equity is always much higher than the short-term cost of debt, in terms of both actual cash cost as well as soft costs like the loss of control and stewardship of your company and the potential future value of the ownership shares that are sold.

Alternative Financing Solutions

But what if your business needs working capital and you don’t qualify for a bank loan or line of credit? Alternative financing solutions are often appropriate for injecting working capital into businesses in this situation. Three of the most common types of alternative financing used by such businesses are:

1. Full-Service Factoring – Businesses sell outstanding accounts receivable on an ongoing basis to a commercial finance (or factoring) company at a discount. The factoring company then manages the receivable until it is paid. Factoring is a well-established and accepted method of temporary alternative finance that is especially well-suited for rapidly growing companies and those with customer concentrations.

2. Accounts Receivable (A/R) Financing – A/R financing is an ideal solution for companies that are not yet bankable but have a stable financial condition and a more diverse customer base. Here, the business provides details on all accounts receivable and pledges those assets as collateral. The proceeds of those receivables are sent to a lockbox while the finance company calculates a borrowing base to determine the amount the company can borrow. When the borrower needs money, it makes an advance request and the finance company advances money using a percentage of the accounts receivable.

3. Asset-Based Lending (ABL) – This is a credit facility secured by all of a company’s assets, which may include A/R, equipment and inventory. Unlike with factoring, the business continues to manage and collect its own receivables and submits collateral reports on an ongoing basis to the finance company, which will review and periodically audit the reports.

In addition to providing working capital and enabling owners to maintain business control, alternative financing may provide other benefits as well:

It’s easy to determine the exact cost of financing and obtain an increase.
Professional collateral management can be included depending on the facility type and the lender.
Real-time, online interactive reporting is often available.
It may provide the business with access to more capital.
It’s flexible – financing ebbs and flows with the business’ needs.
It’s important to note that there are some circumstances in which equity is a viable and attractive financing solution. This is especially true in cases of business expansion and acquisition and new product launches – these are capital needs that are not generally well suited to debt financing. However, equity is not usually the appropriate financing solution to solve a working capital problem or help plug a cash-flow gap.

A Precious Commodity

Remember that business equity is a precious commodity that should only be considered under the right circumstances and at the right time. When equity financing is sought, ideally this should be done at a time when the company has good growth prospects and a significant cash need for this growth. Ideally, majority ownership (and thus, absolute control) should remain with the company founder(s).

Alternative financing solutions like factoring, A/R financing and ABL can provide the working capital boost many cash-strapped businesses that don’t qualify for bank financing need – without diluting ownership and possibly giving up business control at an inopportune time for the owner. If and when these companies become bankable later, it’s often an easy transition to a traditional bank line of credit. Your banker may be able to refer you to a commercial finance company that can offer the right type of alternative financing solution for your particular situation.

Taking the time to understand all the different financing options available to your business, and the pros and cons of each, is the best way to make sure you choose the best option for your business. The use of alternative financing can help your company grow without diluting your ownership. After all, it’s your business – shouldn’t you keep as much of it as possible?

It seems like common sense that a well nourished child is a happier child. Many parents have noticed moody or cranky behavior in their young children before meal time or after school when they arrive home hungry. For an Autistic child, however, who may not be able to accurately communicate his or her needs, this hunger may go unnoticed. Or they may not want to eat and may have many food aversions. For these reasons, integrating nutrition therapy into treatment for children with autism is critical.In many cases, nutrition is not an integral part of overall therapy at diagnosis. Yet many parents who eventually seek out this information on their own, are getting nutrition information from questionable sources. Some parents may not take nutrition therapy into consideration at all.Autism is complex and involves a spectrum of challenging behaviors, so it is natural for both parents and caregivers to initially focus directly on controlling those behaviors. In many cases, the health care team includes a physician, occupational therapist, speech therapist and behavior therapist; but does not include a registered dietitian to provide nutrition therapy. What is interesting is that almost all autistic children have nutritional deficiencies, food intolerance, or gastrointestinal disorders that often are not thoroughly addressed. While studies involving the significance of the effect nutrition status has in the management of autism are preliminary, there is good reason to consider filling this gap in treatment.The goal of nutrition therapy in autism is to support the structure and function of the child’s brain and body to perform at their optimal level and to maximize the child’s brain function so that the response to other treatment is enhanced. Proper nutrition therapy should include a comprehensive nutrition assessment and also address feeding problems, any gastrointestinal problems, or need for vitamin and mineral supplementation.Imagine a child who has difficulty communicating his or her needs, feeling uncomfortable every time he eats due to unknown food sensitivities or intolerance. This sends a negative message to avoid those foods or avoid eating all together. Children with food allergies are at higher risk for nutrition-related problems and decreased growth, but children with autism are more negatively affected due to their problems with sensory integration dysfunction.Allergy symptoms may include hives, coughing, eczema, nausea, diarrhea, constipation, gastrointestinal reflux, watery eyes, nasal congestion or sneezing. To determine which foods are problematic, an “Elimination/Challenge Diet” is applied. Once problem foods are removed from the diet, the discomfort is resolved, and the child becomes more open to mealtime. A well-nourished child is a better-behaved child. In many cases, children who undergo nutrition assessment and treatment, have a formed bowel movement for the first time in his or her life. Imagine how eliminating this discomfort helps a child!Many autistic children may also have a subclinical nutrition deficiency. This is a deficiency of a particular vitamin, mineral, or essential fatty acid that is not severe enough to produce a classic deficiency symptom, but rather has more global, subtle effects that result in loss of optimal health and impairment of body processes. These subclinical deficiencies can cause irritability, poor concentration, depression, anxiety, sleep disturbances or loss of appetite. While it is best to determine which vitamin or mineral the child may be deficient in, minimally a standard multi-vitamin and mineral supplement is recommended. Look for supplements that have the USP label on them, and those that are free of colors, allergens or artificial flavors to eliminate any possible food intolerance issues. Using liquid forms that can be mixed into favorite foods (such as applesauce, yogurt, juices, or sherbet) is one strategy for children who have difficulty chewing or swallowing vitamins. Asking a pharmacist to compound a multivitamin and mineral supplement that is age appropriate is another option.In addition to the multivitamin/mineral, omego-3 fatty acids have been shown to be helpful as well. Numerous studies indicate that Omega-3 fatty acids are deficient in those who have ADHD, Dyslexia and Dyspraxia. Abnormalities in fatty acid metabolism may account for many features common in these conditions. There is some preliminary evidence that it is also deficient in children with autism. For children ages seven and older, 650 milligrams per day of an Omega-3 that provides both EPA and DHA is recommended. For children four to six years of age, 540 milligrams per day is recommended, and for children aged one to three, 390 milligrams per day is needed.Much more research is needed in the area of nutrition and autism, but clearly nutrition is a key piece of the treatment puzzle that is often missing. Speak with your health care team about a thorough nutrition assessment for your autistic child.