Where there's a will, there's a way. The sentiment has never been so accurate in today's financial environment. If you have an idea, a plan and the drive to make your business dream a reality, you can find ways to finance that dream.
Cash flow is the stream of revenue and expenses that alters the cash account available at any given time. Part of keeping your cash flow positive is a strong collection practice, making sure you receive the money owed to you for your product or service. Common sense tells us that keeping personal expenditures down will keep the cash flow positive. But when you need to access more cash, what are your options?
Revolving Line of Credit
A revolving line of credit from a bank offers the ability to borrow a determined, pre-approved amount of money at any time. Payment of this type of borrowing can be in one lump sum (say you borrow $1,500 for website improvements, you can turn around and pay back the $1,500 the next month), or pay back $375 a month for four months, plus interest, or in other increments until the debt is repaid, depending on your cash flow. Flexibility and quick access to cash are positives to this type of borrowing. Revolving lines of credit are usually unsecured if you are borrowing under a certain amount, or secured with a blanket lien on your assets or with a certificate of deposits.
Small Business Credit Card
No one these days is a stranger to credit cards. Credit cards offered to businesses often come with higher credit limits and better, more tailored reward programs. They typically offer additional accounting help, including detailed spending records and personalized payment plans. However, small business credit cards generally come with higher fees than a revolving line of credit and less protection from jumping interest rates. Whoever you are paying has to be able to take credit, so if you are short on cash and need to dip into credit to pay your employees, credit from a credit card is not the type of cash flow you want.
Check out this NerdWallet review of best small business credit cards.
Small Business Loan
A small business loan will increase your cash flow by a substantial amount if you qualify. A stable, secure low interest loan from a bank can lead to investment in equipment or technology, hire the best candidate, renovate, build or go international. Bank loan applications come with a hefty amount paperwork and the ability to show clear and specific business plans and a history of good credit. If you are a strong candidate for a loan through the SBA or bank, get the process started as quickly as possible and get your plans underway for making use of your expected cash flow.
Business Cash Advance
A solution that gives you access to money more rapidly than bank options and does not require longevity in business or a history of good credit, alternative lending options include business cash advance or merchant cash advance. With a quick online application, you know immediately if you qualify and can have funds within three days. Repayment schedules are flexible and no collateral is required. Merchant cash advances are tied to credit payments, so every time you receive payment via credit, a percentage of that transaction goes toward your advance payment. You get working capital with a small daily repayment charge.
In business, positive cash flow is an absolute necessity. Consider your options carefully before choosing the funding solution that is right for the business--there's a will and a way!
This post is brought to you by Bizlender.
Bizlender offers alternative funding solutions for established businesses.