If your business suffers from liquidity problems from time to time, you might want to get creative when looking for funding and finance options.
While bank loans seem to be the obvious solution, they take a long time to get approved and cost a lot of money. They are also inflexible, and every application you make can affect your business credit standing. Find out more below about alternative ways of raising cash fast in your business.
Business cash advance
Cash advance loans are popular among small and medium-sized businesses, as they provide a speedy solution for times when the business is short of cash.
This funding option is suitable for short-term emergencies, such as asset repairs or unexpected business-related costs. The finance is provided through small business banks and can be delivered in the form of a signature loan, or a business credit card. You can get the money in your account in as little as 48 hours.
Working capital loans
You might be able to secure a working capital loan to fund the everyday operations of your company. If you find yourself in a situation when you are unable to pay the bills or wages, due to clients not paying on time, or emergency expenses, you will be able to use your assets to cover the cost of accounts payable in your business.
Some companies have a quiet time of the year when they still need to pay their operating expenses, and working capital funds can help them through these times. This method of raising cash, however, should not be used for funding long-term investments.
Emergency business loans
If you need a fast cash injection in your business, you might consider taking out an emergency business loan, which is much easier and quicker to obtain than a regular bank loan. For this loan, however, you will need to show that your business is profitable and able to generate the repayment amount and the interest within the given time. You can get your funds in a few days.
Personal finance options
For young businesses with little or no profits to show creditors, using personal funds and finance can be a solution. You might ask family members or friends for a short-term loan, or use your savings knowing that you will put the money back in your personal account.
You might want to apply for Title Loans Online to cover unexpected business expenses. Lending money to your business from your personal budget, however, can become dangerous, and you should always record this in your books, to avoid mixing your personal and business finance. When you lend to your own business, you need to show this in your personal and business tax account.
Small business administration loans
If you are running out of options and would like to get a fair deal on your cash loan, you can turn to the Small Business Administration to look for funding options. You can get loans guaranteed by the Small Business Administration, and apply for grants to help you through a long-term difficult period in your business.
The LenderMatch service provides a free finance referral tool that connects you with the most suitable lenders. You might also get in touch with private lenders and investors to get more money injected in your company, however, this option usually comes with a high price, and you might need to give up some of your profits to the lender.
Securing line-of-credit loans
This method is a permanent solution to seasonal cash flow problems. If your business has quiet periods, or are stuck with cash from time to time, you can talk to your business bank to come to an arrangement. You can use the line of credit for purchasing, inventory, paying for emergency repairs, or covering operational expenses in the slow months. You get an extension of cash available for your business, and this type of finance usually comes with a low interest rate.
You need to bear in mind, however, that you need to show a solid yearly profit before you get accepted for this deal by your bank.
Every business owner can find himself in financial difficulties. When machinery breaks down and deadlines approach, or customers don’t pay on time, there are several methods of raising cash fast. While bank loans are best for long-term investments and growing your business, short-term fast loans are better to cover financial emergencies.
Depending on your business profits and preferences, you can raise funds in a few days using the above alternative business funding options.