Small business owners find themselves in need of money to hire employees, to buy raw materials, and to pay for various expenses, among other uses. The capital that they need is hard to come by and requires a lot of out-of-the-box thinking to raise it. Entrepreneurs can mobilize finances from various sources, with each source having its own advantages, yet no one source is necessarily easier than the other to procure. The ease of raising funds from each source depends on the projections you have for your business, your business model, and how well you can convince potential investors. Here are four options for small business owners to obtain money.
Receivable financing (factoring)
Factoring involves selling accounts receivables to a financial company (factor) who advances the business a portion of the amount owed by debtors, for example about 75-90% of their total value, and uses the remaining portion as a margin of safety. The advantage of this financing option is that it enables you to get cash fast without affecting cash flows or orders. It is best suited for ventures that have orders flowing in but that lack the money to service those orders.
Personal installment loans
If, as a small business owner, you need some quick money, you can consider a personal installment loan. To qualify for the loan, the lender simply checks your credit score, and if they find it satisfactory, they will go ahead and process the loan. You can improve your credit score by engaging the services of experts like Boostcredit101 and stand higher chances of getting better personal installment loans. This kind of loan can be processed within 24-48 hours and varies in amounts, depending on your credit score and other factors. These loans, also referred to as cash advances, are ordinarily refunded in fixed schedules over periods ranging from a few months to a few years.
Line-of-credit is one of the most significant credit facilities for small enterprises and startups. The concept behind this loan is that you get your business approved to receive a loan of a specific amount over a certain period, mostly one year. Any time the business is in need of credit, you withdraw from the line of credit as you would do with cash in your bank account. If you have the line-of-credit loan and do not need to withdraw from it, you will save on interests. The beauty of the credit facility is that it offers security if you are not sure as to whether or not you will need some cash or as to how much you may need.
You no longer have to go through the rigorous process with a traditional lender if you need a quick, modest amount of money for your small business. You can quickly and conveniently get a loan from online lenders who, due to advanced technology, have become faster and more efficient. If you are an entrepreneur with a good, stable reputation, you can get the money within a short period of time after requesting it or contacting an online lender. The rates for online loans can be very competitive due to the presence of several players in the segment as well as the streamlining of the process.