One of the hurdles a successful small business owner faces is getting financing to take their company to the next level. If you find yourself in this situation, there are several options that you may be able to take advantage of. The following are among the most important.
Get a business loan from your bank
This is obvious, but there are a few things you should know. The first is that you need a business plan that clearly explains your objectives—a plan that explains how the money will be used and how this will result in increased revenue for your business. Increased revenues mean it will be easier to pay back the loan. You will also need collateral. Often your equipment will be enough, but business property works well, too. Without valuable equipment or property, you may be able to use your accounts receivable in conjunction with a high assets-to-debt ratio.
Get an equity line of credit
If you have equity in your home, you might consider getting a line of credit that is secured by the equity. This loan offers several advantages over an equity loan that is given in a lump sum. You can only use what you need as the need arises, so the interest on the loan will only reflect the money you have borrowed. You will need to pay back a part of the borrowed money after the first month, but your payment will only reflect the amount borrowed. This may be a good idea if your financial requirements for your small business is not needed all at once.
Get a loan through the Small Business Administration
Many people have expanded their businesses with a loan from the SBA, and if you need more than a few thousand dollars, this may be a good idea. The SBA microloan program offers loans up to $50,000. The SBA doesn't actually loan money, but they do provide assurances for the loan to approved lenders. Of course, you will have to meet certain eligibility requirements, but these loans have good terms for a small business.
Use your credit card transactions
If you don't have enough collateral to get a loan but have a rapidly expanding business that processes a large portion of its sales through credit cards, you may be able to use your credit card transaction to get the money you need. There are lenders that specialize in loaning money, and then allow you to pay back the loan through a percentage of your credit card transactions. The interest rate is often higher than the options listed above, but it may be an attractive option for a business that needs money to take advantage of fast-growing sales.
It is important that you take advantage of growth opportunities in your small business, and the options listed above should be helpful.
To learn more, talk to a company such as Triton Capital.
When was the last time you realized you were in the red financially? Although most people don't think about their finances on a day to day basis, it can be easy to find yourself living paycheck to paycheck if you aren't careful. I began thinking carefully about the financial implications of some life decisions I was making, and I knew I had to make a difference. I talked with a loan officer about getting things together, and he was instrumental in helping me to work things out. Read more about my financial successes and failures on this little website. You might be able to avoid some of my previous mistakes.