Open For Business – Now You Need Cash to Grow But Where Do You Go?
As you run your business you’ll undoubtedly come to a point where capital is needed. Whether you’re financing new equipment, funding that new marketing strategy or simply filling purchase orders that are coming in for the holidays. Chances are you’ll need to seek outside financing options to maintain your growing business. With so many lending options advertised you can be overwhelmed and left questioning which options make the most sense. What can you qualify for and how do you know if you’re applying for the most feasible option for your specific situation? That’s why it’s important to closely compare options, not only for the now, but for long term prosperity.
These are the banks you recognize and see on every corner of town, the banks and credit unions with drive-through windows and complimentary lollipops. Big bank financing for businesses isn’t easy to acquire, and qualifying is harder than ever. With strong financials, collateral in real-estate or similar assets and pristine personal and business credit, these banks can possibly get something done. But don’t expect it to happen quickly, and don’t think it’s going to be a breeze either. Anticipate a process lasting several weeks, sometimes months. From due diligence, appraisals, references and multiple underwriting calls, to divvying up nearly every financial statement and business document you’ve ever had. The rates and terms are typically more favorable, but these banks have rigorous standards and qualifying can be challenging to many business owners.
Small Business Administration (SBA)
SBA loans are one of the best ways to finance your small business. Interest rates are some of the most competitive and they’re guaranteed by the federal agency, which allow flexible terms. Similar to big bank loans, SBA loans also have tough eligibility requirements. Businesses need to be profitable and owners’ credit fairly good. Expect a long application process and six to eight weeks to get funded, much as you’d expect from the government.
If your need for capital is specific to equipment, consider equipment financing. This is a fast and simple way to fund up to 100% of the value of the computers, machinery, vehicles, software and technology or whatever else you need to run your business. Options for both leasing and purchasing are available and credit and eligibility requirements are generally more lenient. The collateral is the equipment itself and in many cases the soft costs such as delivery and installation is covered. The process is quick and painless and financial statements are typically not required.
The easiest and most convenient form of financing in the marketplace. Approvals are quick and easy, no collateral is necessary, documentation for funding is limited and you can typically access capital within a few short days. Short term business loans are a very popular tool for businesses that need to quickly take advantage of opportunities that arise, getting in and out, then moving on to the next opportunity. Interest rates tend to be higher and terms are generally shorter but establishing your business with an alternative lender can see long term benefits. As your payment history and tenure lengthens, generally the terms lengthens, the rates decrease and the amounts increase. Many alternative lenders offer platforms similar to that of a business line of credit. These options allow for your business to quickly capitalize on opportunities for growth, expansion, and maximize your return on investment.
Finding a business loan should not be a daunting process and you shouldn’t have to spare unnecessary time doing so. That time is better spent doing what you do best, running your business. Finding a great company with the skill, experience and industry expertise is vital to ensuring that you’re getting the best of what’s available to you and your business. You need a company that consults with you on your growth strategies, shares your vision for the future and makes a valiant effort to source out the most practical and cost efficient lending solutions available. A company that has an expansive network of investors, lending partners and a proven track record of success.