As a business owner, you are well aware of the fact that your cash flow is your business’s lifeblood. It’s what fuels your operations, covers your expenses, propels your business to grow, and protects it from the unexpected. But, what happens if demand for your products or services suddenly begins to wane? Or, you have to buy an essential piece of equipment to complete or take on a project? Perhaps you’ve underestimated a project timeline, and you’ve wound up with additional payroll expenses. Do you have enough capital to sustain your operations and handle whatever comes your way without putting your cash flow at risk?
There is an infinite number of contingencies to plan for when running a business, and just as many reasons why many independent business owners need access to capital that they can’t necessarily generate themselves. The good news is that there are solutions out there that are tailored to business owners just like you that provide access to the capital you need to effectively operate, protect, and grow your business.
Small Business Financing Options
If you run a well-established business with a good credit rating, your activity and credit history should speak for themselves, allowing you to secure funding from a traditional bank pretty easily. If, however, you’ve started a new business or have a less-than-favourable credit score, consider the lending options available to you. Online lenders, for example, can often get you the funds you need much faster than their traditional counterparts. What’s more, their approvals are based on more than just your credit score, such as time in business, monthly sales, etc.
You should also take the time to think about the type of funding you want to secure. Though there are many options available, some loans may be better suited to your immediate or long-term needs. We’ve chosen to focus on two popular options that most small and medium businesses turn to when in need of capital.
Small Business Term Loan
This is one of the most common types of funding, and involves borrowing a large amount of money in a single shot. Whether you use these funds right away or not, as soon as you’ve taken out this type of loan you immediately begin paying it back in regular instalments, within a specific time period, and at a set interest rate.
Term loans are ideal for small and medium businesses that need capital to pay for major one-time expenses that have the potential to exhaust their cash flow. If you need to carry out renovations, are looking to open a new location, or are planning to buy a new piece of equipment, this is an option you should consider.
Business Line of Credit
A line of credit works much like a credit card; however its credit limits tend to be higher, interest rates tend to be lower, and because it consists entirely of cash, you aren’t charged for cash advances. Unlike a small business loan, which provides you with a lump sum of capital, a line of credit gives you access to a set amount of funds up to a specified credit limit that you can use as needed, at our own discretion. What’s more, you’re only required to pay back what you’ve spent plus interest. Every payment you make refreshes your limit and ensures you have ongoing access to funds.
The best way to make your line of credit work for you is to apply for one before you need it and then keep it handy for your short-term capital needs. You also want to stay on top of your payments, so that you can build a better credit rating and ensure you have the funds you need, whenever you need them. Business owners typically rely on this type of funding to make up for temporary cash flow shortages, cover equipment repairs, inventory reorders, or to fund marketing campaigns. A line of credit essentially acts as a cash cushion, which you can fall back on to cover smaller, more immediate expenses.
It’s a sign of proactivity on your part, and is often a necessary step to protecting your business against potential threats and future challenges. It also ensures your cash flow is strong enough for you to be in a position to explore new growth opportunities.
If you run a business that’s in need of immediate funds, we can help. Applying for a small business loan or a line of credit with us is easy. Take a few minutes to provide us with your details, get approved instantly, and use the funds you need in as little as 24 hours.
Do you need fast access to capital?
If you run a business that’s in need of immediate funds, we’re here to help!