Alternative Financing For Small Business Owners
Financing your business is often a difficult task and can be a stressful burden if you are need of capital to stay in business. Fortunately, there are numerous alternative financing options to take advantage of. It is not always possible to obtain a loan from a bank and it may not be worth going through the long and strenuous process if your credit is not the best. Here are some other great ways to finance your small business and eliminate the chances of having to shut down due to a lack of funds including factoring, merchant cash advances and purchase order financing.
If you need quick cash and have outstanding customer invoices, factoring may be the perfect financing option for your business. This works by selling the invoices to a factor company who becomes responsible for collecting the invoices. Since the invoices are not yet paid for by the customers, you take a small deduction. The main advantage to factoring is accessing quick cash and it is worth it if you have a lot of invoices laying around and are running out of capital.
Merchant Cash Advances
Another alternative financing option for small business owners to take advantage of is merchant cash advances. This is also known as credit card receivable funding and is a great way to get quick cash for your small business. A provider pays your business and you receive a set amount of future credit card sales. Since it is all about finding a great rate, it is crucial to take you time and find the right merchant cash advance provider.
Purchase Order Financing
Purchase order financing, also known as inventory financing, is another great financing option to take advantage of and can help your business if you experience seasonal fluctuations and your cash flow is always unpredictable. This allows you to purchase a large amount of inventory to sell in the future. The inventory can be your collateral for a loan or other type of financing option you are seeking.
Obtaining capital from non traditional sources has never been more common and may be the difference between your business growing or closing. Factoring, merchant cash advances and purchase order financing are three alternative financing option to take advantage of. If you find yourself in a jam and need cash immediately, factoring may be the perfect solution. If you experience a lot of fluctuations in sales and cash flow, it would be wise to consider purchase order financing.