Business owners know that maintaining positive cash flow is critical to their company’s health. It is important to evaluate the small business financing options available before they are required. Here is a quick summary of some funding options.
Most small business owners turn to banks first for financing. The bank reviews your credit score and available collateral. Their offer includes specific terms and fees, including minimum payment, repayment length and interest rates. Traditional lenders have a longer underwriting process. The best payment terms are offered to established businesses with high credit scores.
Many companies overlook using business credit cards for their small business financing strategy. You can use these for day-to-day purchases or finance larger purchases. Review your credit card repayment terms and interest rates to make sure understand the total amount you are paying. Some owners purchase with their credit card, pay it down for several months and improve their credit rating. A stronger credit history allows them to refinance debt at a lower interest rate.
Your local SBA office can help you secure funding. SBA offers guaranteed loans for larger projects up to $5 million. They also offer smaller microloans up to $50,000. The average microloan is $13,000 and can be used for many reasons. SBA offers a counseling and support system for business owners who experience damage due to disasters or emergencies.
Boost your small business financing goals with a savings account. Having cash on hand can help in the event of an emergency. In addition, you can take advantage of unexpected purchases that benefit your business. Lenders and investors appreciate working with a business owner that has a savings strategy. They typically provide you with better terms on your loan offer.
Small business grants are a great resource for financing that does not need to be repaid. Because they are in high demand, the application process is lengthy and challenging. You are more likely to be selected when you understand the application requirements and make sure you are a strong match before applying. Many firms award grants to businesses in underserved communities or businesses run by veterans or women.
One of the best financial strategies you can implement for your business is to have a prepared list of funding options that work for your company before you need them. Should you need quick access to funding, you already know what strategy you will use.