Funding Sources For Your Business
Cash is king, especially in a business. When you don’t have enough working capital on hand, you don’t have the money to pay your debts, and you won’t have the funds to build and grow your business. Because of that, you need to know what your different options are for small business funding.
Small Business Loan
The government backs SBA loans, so businesses that are considered high-risk by traditional lenders can get the money they need for their business to succeed. SBA loans are available in amounts up to $5 million. So you will have all the funding you need to keep your business running.
While SBA loans are one of the most preferred small business funding methods, they don’t come without their hassles. The application process requires a lot of paperwork, and it can sometimes take months to get approved. You’ll also have to meet specific qualifications to be approved.
If you have an established business, consider getting a traditional bank loan. Bank loans are harder to qualify for than other types of loans. But they typically come with lower interest rates and better terms.
To get approved for most bank loans, you’ll need a good personal and business credit score. As well as plenty of assets to use as collateral. You’ll also need to have been in business for a minimum of two years and have a solid stream of income.
Line of Credit
Some companies prefer to use a line of credit for their small business funding. With a line of credit, you’ll have access to the funds you need for as long as you need them. A business line of credit works the same way that a credit card does. The funds are continually available as long as you pay the balance off. Additionally, you only pay interest on the amount you use.
Lines of credit are beneficial because you can use the money however you would like, unlike with some other kinds of funding. If you ever find that you are low on capital and need to pay your employees or rent some equipment, you can rest assured knowing that you have your line of credit to lean back on.
Purchasing new equipment can be very expensive for a company, but it’s also necessary for a company to grow. If you find yourself stuck in a vicious cycle of needing equipment, but not having the money for it, then consider getting equipment financing. The financing can be used to construct new buildings, buy office equipment, or get new machinery that you might need to grow your business.