A business’s financial health is one of the most important factors in its success. With a proper business finance plan, business owners can make wise financial decisions and leverage more opportunities. The saying, “you need money to make money,” couldn’t be more true. It is crucial to a business’s growth.
Working capital finance
A business can take a working capital loan to cover any short-term cash flow needs. These loans typically have lower interest rates than long-term business loans and can be obtained from various sources. Traditional banks and credit unions are a good option for established businesses with good credit and collateral. Online lenders are another option for borrowers with less-than-perfect credit but may charge a higher APR.
Off-balance-sheet financing
Off-balance-sheet financing is an excellent option for businesses that are growing fast and have many business finance needs. Using this type of financing is fairly straightforward. Essentially, you set up a credit line with a factoring company and let them advance your money in exchange for your accounts receivables. The factoring company owns the property until the invoice is collected, releasing the balance to you.
Microfinance
If you are looking for a way to expand your business, consider using microfinance. Microfinance is a form of alternative lending aimed at helping those underserved by traditional banking institutions. These loans are small and flexible and are designed to help small business owners get the financing they need to grow. Microfinance institutions often work with entrepreneurs who may not have any previous business experience. Many clients lack formal education, and many are women who may not know how to enter a traditional bank.
Long-term finance
Long-term business finance needs is a loan that extends over a long period. This type of funding is often used for business acquisitions. This type of funding allows a business owner to pay off the debt over a long period with profits.
Angel investors
If you need business finance, consider seeking angel investors. These investors may be individuals or may form groups to provide funds to small businesses. Angel investors generally make the first investment and may participate as follow-on investors in subsequent financing rounds led by institutional investors. Some angel investors even form partner funds to provide additional exposure and leverage to the companies they fund.
Loans from within the business
Applying for a loan from within your business can be very fast and secure. All you need to do is submit an online application, which takes just a few minutes. Then, if you are prequalified, you will be contacted and guided through the rest of the loan process.