Most businesses need outside funding at some stage of their growth. They may need to acquire real estate, purchase inventory or equipment, maintain cash flow through slack seasons, handle emergencies, or spur further growth. Here are the most popular business financing options to consider when your company requires a fiscal boost.
Short-term loans work well when you have urgent needs that require immediate cash such as unexpected shortfalls or sudden opportunities for lucrative projects. Short-term loans have simple application processes, do not require high credit scores, and allow you to receive funds quickly.
If your company is well-established, has stable cash flow and a strong credit score, and needs funding for refinancing existing debt, upgrading equipment, or following through with plans for expansion, a multi-year term loan may be what you need. These loans require more paperwork and a longer application process, but they offer lower monthly payments.
Loans from the U.S. Small Business Administration are desirable sources of business financing in that they have favorable terms, low-interest rates, and low monthly payments. You can use them for refinancing debt, buying property, or purchasing equipment. However, the application process takes time and requires a significant amount of documentation.
Lines of Credit
Lines of credit allow you to have working capital available whenever you need it. You only pay fees and interest when you access the funds, and you have significant flexibility in how you can use the money.
Multi-year loans specifically for equipment allow you to purchase tractors, trailers, forklifts, computer and phone systems, and other items with low monthly payments. The application process is usually quicker and easier than for multi-year general purpose loans.
Accounts Receivable Financing
Accounts Receivable Financing, also known as factoring, enables you to use your unpaid invoices as collateral for business financing. Instead of waiting for slow-paying customers to honor their accounts receivables, you can obtain the funds you need immediately to strengthen your cash flow.
For more advice on business financing options, get in touch with Prime Wealth Development.