Running a small business comes with a vast number of associated costs, unexpected expenses, and projects which tend to run way over budget. You need reliable, experienced financial advice and resources, and a source of funding specifically designed for small businesses. There are a range of opportunities available to help your business grow and develop; if you’re looking to take the next step, here is what you need to know.
What Are My Options?
When looking into small business funding, it’s important to remember that taking out a loan is not your only option. There are other solutions to boost your financial offerings, such as:
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Invoice Factoring
One of the most frustrating aspects of a business can be when clients are late paying invoices. This delay can have a ripple effect on other areas such as bills, particularly if your business is smaller and just starting.
Invoice factoring works by a company providing a percentage of the invoice value in advance – usually up to around 80% – based on the credit risk profile of your clients. The remaining portion is received after all of the invoices are due, minus a factoring fee. This fee is usually around 3-5% of the value of the invoice.
This option allows essential bills to be paid on time, without worrying about late payments from clients. Invoices which are ideal are those with extended credit terms, or those no more than 60 days overdue.
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Merchant Cash Advance
If you need to assess working capital fast, merchant cash advance is a way to receive up to $250,000 cash deposit within 24 hours. All that is required by many providers is for your business to accept credit cards. The funding is based on a number of future sales, and repayments are automated, making this an affordable and stress-free method to access working capital.
This choice can be an ideal option for smaller and start-up businesses, as no collateral is required and the cash is delivered quickly. For newer companies, most companies will require that you have been trading for at least six months and have an average monthly revenue of at least $7500 over the last three months to qualify.
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Small Enterprise Mortgage
Taking out a small enterprise mortgage against your business can be a simple way of accessing equity and much-needed cash. There is a range of options available depending on the size, history, and nature of your business, as well as better deals for substantial profits and good credit ratings.
If you’re looking to invest long term in your business, this can be a viable option to release funds for expansion and growth.
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Small business loans
The most traditional form of finance is, of course, a small business loan. It is important to research thoroughly to find the best offer and provider for your individual needs, and discover what best suits your business. Consider aspects such as repayment length and costs, interest rates, restrictions and limitations, and existing financial commitments.
