The Easiest Options to Finance Your Small Business
As an entrepreneur, you know that a reliable source of capital is critical to just about every aspect of your business. Whether you’re simply hoping to more comfortably afford your general operating expenses or making plans for expansion, chances are that you will need to obtain financing at some point to keep your company healthy. The good news is that there are multiple options available, and small business loans can be much easier to obtain than they were in the past.
If your company is well established and your credit history is strong, then a term loan may be right for you, especially if you are seeking a large amount with longer repayment terms. With this financing, you can receive a lump sum of money up front and make a set payment each month, plus interest. The qualification process can be lengthy, and banks sometimes consider small businesses a risk. However, if you meet the requirements, this funding can be very affordable.
The Small Business Administration is a government agency that partners with commercial lenders to offer financing for small businesses. By guaranteeing a large portion of the loan, the SBA encourages banks to work with companies that they may otherwise be wary of funding. The process for these small business loans can be lengthy, but you may be able to obtain attractive interest rates and longer repayment options if you qualify.
Lines of Credit
A business line of credit shares many similarities with a credit card. Upon approval, you will have access to a revolving line of credit, and you can borrow from a predetermined limit. You pay interest only on what you use, and as long as you make timely payments, you can continue to withdraw funds.
If you need cash for your business while you wait for customers to pay their invoices, you can sell your accounts receivable to a factoring company. The factor will pay you an advance up front, and the remainder will be paid to you when the customer settles the invoice, minus the factoring fees.
Equipment, such as vehicles and machinery, can be a costly expenditure for your business. If you need to make a large purchase, you can utilize this asset-based loan to fund it, rather than paying out of pocket. The equipment acts as the collateral, and the terms for this financing can be quite flexible.
As your company grows, you can ensure its financial health through a number of viable options. Take the time to research the many forms of small business loans available to find one that can help you take your operation to the next level.