Running a business isn’t easy, and there have probably been more than a few times where you’ve struggled financially. Although you can survive on making just enough to get by, most businesses will want to expand at some point. If you want your business to grow, it’s inevitable that you will have to find money from somewhere. So, what are your options when you want to boost your business with a cash injection? Take a look at what’s available to you. You could be pleasantly surprised.
Just because you need a cash injection for your business, it doesn’t necessarily mean you have to get into debt. There are many people out there with money to spare, looking for smart investments. Is your business something that could make an investor money? It’s better if your business is at a stage where it’s ready to expand. If you can demonstrate what the money will do and how well you predict the business will benefit from it, you could have what you need to interest an investor. You can even do it easily online these days. There are many websites where investors and business owners come together and business owners are able to pitch ideas.
The type of business loan you require really depends on what you plan to do with the money. If you want the money to grow the business, you can afford to take your time and look at all of your options before deciding on one. If you want the money to get the business out of a bind, perhaps to cover expenses while the business goes through a slow phase, a short-term loan could be a better idea. However, it’s best to get more info before going ahead. Of course, getting any kind of loan is a viable option for businesses, but you have to remember that it needs to be paid back.
Line of Credit
A line of credit is another type of loan, with perhaps less of a financial risk. As a business, you would agree upon a line of credit (a certain amount of money) and agree upon a time frame in which you have to use it and pay it back. The benefit of a line of credit is you only pay interest on the money you use. So, if you only use 75% of your line of credit, the remaining 25% will be interest-free. You can also use the money as you would with your own bank account, taking it out in installments as and when you need it.
Factoring is where a financial institution purchases your accounts receivable. The financial institution will advance you a portion of your accounts receivable so you have the ability to continue business without disruption. It’s an ideal option for businesses that have the clients coming in but not the resources to fulfill demand.
It can be tempting to get excited and go with the first offer of money, but with so many options available to businesses these days, make sure to take your time.