If you are looking to improve your cash flow and want to set up your business’ future for success, it is time to take advantage of financing opportunities that are available to you. Here are six moves you can make to gain some extra capital.
1. Apply for an SBA Loan
The Small Business Administration (SBA) offers numerous loan programs for small businesses. Specifically, loans for those with less than 500 employees or those who wouldn’t qualify for a traditional loan. You can apply for this loan through authorized SBA lenders. If you are interested in applying, you will need to provide the documentation you would send in for a typical loan. This could include tax returns, your business plan, and financial projections. You may also notice that SBA loans have similar terms, maturities, and interest to regular bank loans.
2. Apply for a Small Business Grant
There are many grant programs that could be at your fingertips by simply doing a quick search online. You can also find a list of grants that are available here. Grants can be useful as they can help fund your business activities, development, and research. Unlike loans, grants do not need to be paid back, however, they may have additional requirements.
3. Look into Online Lenders
This option is generally more expensive, however, loan approvals are often within 24 hours. The quick turnaround time is what makes online lenders attractive.
4. Merchant Advances
Merchant advances are popular through services such as Square and Paypal. Although this can be pricy, it is another fast option you can use. As long as you pay back the providers quickly, this could be a useful tool. However, I don’t recommend this option due to the high cost of financing unless you have no other choice.
5. Credit Cards
Using credit cards to pay bills or take cash advances may sound intimidating due to the high-interest rates and fees you may incur, but if you are able to pay them off in the same month, this may be a helpful financing option to get cash quickly. However, if you do not have the option to pay it off by the due date or find more affordable long-term financing, then this may not be for you. Once again, I caution against using credit cards unless you can pay it off to avoid interest on the amounts in use.
6. Factoring
Factoring is a method allowing you to receive immediate cash for unpaid invoices. This can be useful for larger invoices or for customers who are known to pay slowly. You generally receive a large percentage of the balance up front, and when the customer pays, the remainder less a fee is remitted to you.
Methods to avoid include delaying payments to vendors and relying on friends and family. Be sure to treat vendors with respect and pay them on time if you want to have a successful relationship. And borrowing from a friend or family member could hurt your personal relationships.
In the end, there are many ways for you to finance your business. As you are considering the best option to improve your cash flow, avoid securing a loan with your personal assets such as your house as that is putting too much risk on yourself. It is ideal to also keep personal and business funds separate.
Be sure to reach out to your business banker to see what they can do for you as well. You may find they are able to give you the funds you need for a much more reasonable rate than some of the options listed here. But if you need funding and a bank loan is not an option, one of those described in this blog may be the right fit for you.
https://sba.thehartford.com/finance/6-financing-tips/?cmp=EMC-SC-SBA-94194294&eml=1
