When looking for bank loans sometimes people get locked into a certain type of loan, such as a line of credit or a term loan. They might get turned down by a bank and feel frustrated in the process.

But they may not realize that there’s a wide range of debt financings that are possible. It could still be that their company is bankable, but they just might have to look at a different approach instead.

For example, suppose a company has tried to go for a line of credit on accounts receivable and heard, "No," from several banks. There’s still factoring as an alternative. The rates will be higher, significantly higher, but it still might be a better alternative for the company than having to say no to taking on some customer orders.

Considering there’s inventory there might be more options than people realize as well. A company might have a line of credit available for their inventory, but it probably won’t cover purchases coming from overseas until they land at the company warehouse. Does the company have to fund that themselves? Not necessarily. There could be purchase order financing that could be used to finance the inventory from the period when the order is placed with the factory overseas and when it’s on the water to when it comes into the company warehouse. Like factoring for receivables, this too is going to be much more expensive than regular inventory financing on the line of credit. However, if it means the difference between doing this or not doing it and having to turn down some orders, this might be a viable option.

Those are just a couple of examples. There’s many more that could be mentioned.

Think of a line going across. On the x-axis along the bottom would be different types of financing. On the y-axis would be various different interest rates. There’s a wide range of options. It’s just a matter of finding how far down the line you have to go and how high up the interest rate will be.

For most situations, there’s a financing that can get done. It’s just a matter of finding the right spot on the line. Often the frustrating comes in when somebody tries to take a higher risk situation and get financed with a lower risk debt vehicle.

Know where you are on this timeline, go for the financing that fits the particular level of risk of your situation and you have a better chance of getting financing and still be better than either not having it or having to go with much more expensive equity financing.