5 Ways Your Business Can Access More Money
Whether your business is just getting on its feet, or has been around for two decades, it likely needs financing to help fund growth or if unforeseen circumstances affect your cash flow. For that reason, it’s important to know what ways your business can access more money. Here’s 5 ways to get you started.
Bank Lines of Credit
A bank line of credit, also known as a business line of credit, is a loan where your lender makes a certain amount of cash available to your business that you can use at any time. Unlike a regular business loan, a business line of credit won’t charge interest on the unused portion of credit you’re borrowing. Lines of credit are the most popular form of funding for a business but beware of what the bank asks as collateral. You can read more about things to consider when getting a line of credit here.
Business Credit Card
Business credit cards work very similarly to a personal credit card and spending limits are generally high, so it’s a good option if you’re looking access more capital. The better personal credit you have, the better chance you have at getting approved for a business credit card. Other benefits from a business credit card are the rewards. Depending on your card, you could end up with cash back, flight miles, hotel stays, or other discounts on amenities your business may need later. Be sure to use business credit cards wisely for short term purchases, as the interest rate tends to be higher compared to other financing options.
SBA Loans
It’s highly likely that if you’re a small business, you’re familiar with the Small Business Administration. The SBA partners with lenders to provide SBA loans, which are loans guaranteed by the government so that lenders can mitigate risk and offer financing at low rates. The 7(a) loan is the SBA’s primary program for general business needs. For non-profits, the 504 loan is meant for the purchase of equipment and property. SBA loans can take time to prepare the necessary paperwork and then go through the review process, so make sure you plan accordingly.
Equipment Financing
For the remaining 90 percent of business that are for-profit, equipment financing is going to be the least expensive way to keep your cash on hand. Direct lenders, not brokers, have a specialty in the equipment world, which means they can give you lower payments and be more flexible with terms. Financing your equipment with a direct lender, like American Capital Group, can help you purchase your equipment so your other business cash resources can stay available, and you can use that money for other business needs. Read more on equipment financing here.
Working Capital
For short-term use, working capital loans are good way to cover a company’s operational needs. Consistent cash flow is vital to the health of any company, so inconsistent cash flow, seasonal sales fluctuations, and rapid business growth are all good reasons to get a working capital loan to close the cash flow gap. Make sure you read and understand the terms of your agreement, as working capital tends to be the most expensive financing option.
Financing is a great way to fund and grow your business to the next level. As always, do your research to make sure you’re choosing the proper financing for your needs. Successful businesses tend to have two or three financers, so consider having more than one type of financing available to your company, and don’t forget your options! Need money for the purchase of new or used equipment? Let us know what you are looking at and we will let you know what your monthly payment would be.
