Almost all businesses need some form of outside financing to ensure steady cash flow and stimulate further growth. What funding product you opt for depends upon the specific requirements of your company.
Here are some descriptions of various types of business financing to help you decide the right option for your company’s needs.
Lines of Credit
Having a line of credit is a desirable business financing option for almost any company. Once your application is approved, you have access to capital whenever specific needs present themselves. Until you draw on the line of credit, you pay no fees or interest, and when you pay back the amount you borrowed, you have access to the funds again when the next need arises.
Loans guaranteed by the U.S. Small Business Administration generally offer low interest and favorable terms. The most popular is the SBA Basic 7(a) Loan, which business can use for working capital, machinery, equipment, real estate, and other needs. You can use SBA 504 Loans for modernization and expansion needs such as equipment, machinery, and real estate. The SBA also offers 7(m) Micro Loans that small businesses can use for inventory, furniture, supplies, and working capital.
Long-term loans are generally approved for businesses with well-organized finances, steady cash flow, good credit, and stable operational histories. The main benefit of these loans is the low monthly payments that put a minimum of stress on your business financing. You can use these loans for working capital, buying needed equipment, or refinancing existing debt.
Some long-term loans are for the specific purpose of helping you to purchase equipment. These loans enable you to obtain tractors, forklifts, trailers, computer systems, and other needs at low monthly payments that do not negatively impact your company cash flow.
Short Term Loans
The main benefits of short-term loans include their easier application processes and speedy approval so that you can have the funds you need in a matter of days. These loans are helpful when you have an unexpected cash shortfall or an opportunity arises that you must act on quickly.
Accounts Receivable Financing
With accounts receivable financing, also known as factoring, you use your outstanding invoices as collateral. Instead of getting paid in 30 to 90 days, you can have the funds immediately to use for urgent needs.
For more advice on business financing, contact Integrity Financial Capital.