Even the most successful businesses have financial struggles. It’s par for the course.
When that moment materializes, it’s a good idea to understand your financing options and choose one that suits your business needs. If you need access to cash sooner rather than later, you need to find a company that makes small business financing easy.
Consider the following viable options when your business needs cash in a hurry.
1. Business Line of Credit
A business line of credit is perhaps the easiest and most reliable short-term cash option available to business owners. It’s like a credit card: your business is approved for an amount of credit, and you take money out as you need it. You only pay interest on borrowed sums, and when you pay it back, you can borrow anew.
It can be an especially good option if you’re responsible about borrowing no more than you can afford to pay back without needless struggles.
If you’re established and have good credit, a line of credit is an affordable and convenient method of gaining access to the cash you require.
2. Merchant Cash Advance
Merchant cash advance is a non-traditional, future-sales-backed loan product. If you qualify for one, you’ll receive a sum of money upfront in exchange for a portion of credit card or debit card sales until you repay the advance and applicable fees.
It’s a good option if you need the cash fast, since you can often get approved within a day. One thing to know is that merchant cash advances come with loftier average rates than some other funding options. So, you’ll want to keep that in mind.
3. Invoice Factoring
You may also want to consider invoice factoring. It’s a financial deal where your company can sell outstanding invoices to a factoring business at a discount in exchange for an upfront cash payment. If your customers typically take months to pay invoices, that can create cash flow issues that invoice factoring may help to alleviate.
4. Short-Term Business Loans
For one-time, urgent needs — like purchasing machinery, conducting a campaign, or meeting an unexpected bill — a short-term business loan can be a godsend.
Such loans offer a single upfront amount of money for a limited repayment tenure, typically three to 18 months. The exact repayment period will depend on the lender.
Consider that short repayment periods may mean higher monthly installments. This is, however, a suitable option for businesses that are certain they will repay the loan within a short time period.
5. Business Credit Cards
A business card may be a simple, hassle-free means of getting access to emergency funds for unforeseen expenses or covering unexpected cash shortfalls.
With most cards, instant credit is available, and some have intro 0% APR offers, which allow you to borrow interest-free for a couple of months.
Even though the credit card interest rates are costly if not paid off in a timely manner, they are highly convenient in emergencies and for short-term use. It’s worth having one or more business credit cards on hand — just in case.
Many Options Available
When your business needs cash quickly, the solution is to be proactive — but not irresponsible. Knowing your options and choosing wisely is a good strategy.
All sources of cash have their use, their limitations, and their ideal applications. Business credit lines and charge cards are convenient. Short-term loans and merchant cash advances tend to offer fast qualifying periods. And invoice factoring lets you get paid now for work you’ve already completed.
Consider the financial health, repayment ability, and growth potential of your company. That way, you’ll choose the right option when you need cash sooner rather than later.
