If you own a business, the chances are really good that you have had or will have a need for financing. There are many different financing options, from traditional loans to a business cash advance. The type of funding you get may rely on what the reason is behind the need for financing. Here’s a look at the different reasons you may need financing and suggestions on the types of financing you might consider.
Start Up Costs
Almost all new business owners will need money up front to start their businesses. Start up funding can come from many sources, but there are a few that are more likely to work than others. A Small Business Administration loan is one option. You may also try borrowing from friends or family. Some owners even use their own money and credit cards. Typically, other options, like cash advances or traditional loans, can be difficult to get until a business has been established. The good news is that once you start making money, your financing options will multiply.
Slow Business
Most businesses will have ebbs and flows in income. An example would be a garden center that would likely see far more business in spring and summer than in fall and winter. So, during the down times of the year, the business may have cash flow issues and need some financing to help pay for operating costs. In a case like this, financing options are a little better than with a start up situation. A business cash advance could be a great option or even invoice factoring. Both options will give you money based on money you earn, so you aren’t really going to be getting yourself in too deep during a time when money is tight.
Expansion
Just as starting a business takes money, expanding a business requires money. Typically, if you are in a position to expand your business, your business will likely be in good financial shape. This opens up the doors to many financing options. You can pretty much have your pick from a business cash advance to a traditional bank loan. The important thing to keep in mind here, though, is not to get yourself in too deep. For example, a loan is a huge financial undertaking that requires repayment plus interest. On the other hand, if you choose an option like a cash advance, you are simply borrowing money from yourself because you are borrowing against future earnings, so you won’t be hit with as many fees and costs.
Every business needs to have a decent cash flow at all times in order to be able to operate. You have to be able to afford inventory, employee salaries and overhead costs. If you find yourself in a situation where you can’t afford these, you could use financing. At the same time, when you are starting a business or expanding one, you will also need money to pay for the things you need to run the business. This situation also calls for funding. Regardless of why you need money, though, you have options like a business cash advance, invoice factoring and loans.