The Different Options for Small Business Financing
If you are a small business owner, you have a number of options available to you for trying to secure financing to keep your operation going, and improving it.
Here are some of the best options to pursue, and the one you should choose will depend on your specific business circumstances.
Business line of credit
Probably the most flexible and cost-effective financial product that a business owner could have is a line of credit. Capital can be used as needed, with no restrictions as to what can be used on, and there’s no interest imposed on the account until you actually use some portion of the line of credit.
A short-term loan is a great way to manage immediate financial needs, for instance for purchasing inventory, handling business shortfalls, or when business opportunities arise. Your credit score will play a big role in determining whether or not you can be approved for a short-term loan, but if you can get approval, you may be able to get the financing you need in just a few hours.
Accounts receivable financing
This financial product makes use of invoices as collateral, and is a great way for businesses to receive immediate cash in exchange for selling some or all of your invoices to a factoring company. The real benefit of this kind of financing is that you won’t have to wait as much as 90 days to have an invoice paid, but can instead receive immediate cash from an alternative lender.
This is one of the most popular financial products available to small business owners, with rates beginning at 5.25% and repayment terms which vary between 10 and 25 years. There are very few small business loans available which can compete with SBA loans in popularity or in effectiveness for small businesses.
Almost every small business will have a need for purchasing equipment necessary to conduct business, for instance computer systems, trucks, tractors, and other heavy equipment. Instead of using cash reserves, many small business owners resort to equipment financing to stretch out payments over several years, so that monthly repayments are manageable.
Multi-year term loan
This type of financing is most appealing to small businesses which are seeking a long-term, low interest loan for some major purchase or other business opportunity. These kinds of loans are often used for the purpose of consolidating our refinancing debt, purchasing new equipment, and infusing a significant amount of working capital into the business. While they typically require more documentation and a strong credit history, the benefits derived from obtaining a multi-year term load are considerable.
Financing your small business
If you’re having difficulty getting the financing you need for your small business, contact Commercial Capital Lending today. We have helped many small businesses already, and we’re always looking for opportunities to make new friends in the business world.