Asking for money can be stressful, no matter the circumstance. Whether you are starting a brand-new venture, or your current business is needing a boost, you may feel overwhelmed by ever-growing financial needs. A business loan may be a helpful option to alleviate financial stress, although the process itself can seem challenging to organizations with limited cash flow. Consider these three tips to help obtain financial support:
1. Prepare and Organize
Become your business’ monetary expert. How much debt do you have? What is your net worth, and do you have funds for a down payment? Organizing details before shopping for lenders will help you understand your position and realistic expectations. You may also have contracts in place with anticipated payment dates, or collateral that could lessen financial risk for lenders. Know your organization specifics and have a best-case-scenario plan in place before requesting your business loan.
2. Consider Current Options
Before you achieve positive cash flow, your business may not be eligible for an SBA loan or traditional term loan. Beneficial options exist if you need financing sooner than later, including:
Equipment and Invoice Financing
If you need equipment, lenders may offer financing by using the item itself as collateral. This option is especially helpful for assets that can help increase revenue and positively impact your overall business plan, and cash flow is not necessarily a factor in equipment financing consideration. Invoice financing is another collateral-based loan, allowing you to cover unpaid invoice expenses before receiving payment for services rendered.
Business Credit Card
Similar to your personal account, making day-to-day purchases with a business credit card can help establish or raise your credit score. This option would not cover larger operational, rent, or personnel costs, but it can cover current expenses and provide points and perks for usage (who can turn down free rewards?)
3. Pause to Plan for the Future
Perhaps spending some time to critically evaluate your business operations, determine potential cost-savings, and accumulating cash can help put your business in a better position to apply for a business loan. Employing an alternative lending option like the business credit card or equipment and invoice financing may also increase your cash flow, setting your business up for financing success. After time has passed, you may also receive a better interest rate offer, which could save you money in the long run.
No cash in the bank? No worries! Even without the capital, you can develop a stronger understanding of your financial standing, consider alternate financing and credit options, and put your plan into action to strengthen your bank account for future lending.