It takes money to make money. Needless to say, money runs your business. It’s needed for the livelihood and expansion of your business.
With that said, the lack of funds may hinder your business. Complications such as insufficient funds for salary, loss of electrical and water supply, and insurgency among workers may arise when your business lacks finances. To avoid complications that may lead to losing your business, borrowing money might be your last resort.
Normally, when looking for financing options, traditional funding is a way to go. Traditional financing, such as banks and credit unions, offer different loans that fit your business. However, there are times where traditional funding is not an option. Whether it’s because they bar you from taking a loan due to your poor credit score or it’s because the loan has an interest rate that you cannot afford, it should not hinder you from saving your business.
To bridge that financial gap, it might be wise to go for lending alternatives.
Right Lending Alternative for Expansion
When you see that your business is growing, it might be a good idea to expand your business. When you carefully plan and execute the expansion, your business will grow even more. A line of credit suits as a funding source when you are expanding your business. One of the benefits of alternative business funding is that repayment processes are flexible.
When applying for a line of credit, lenders may offer you more than what you need. In order to ensure you have more room for adjustments. Sometimes, as a bonus, if you don’t use up the credit, the lenders will only make you pay for what you have used.
Right Lending Alternative for Inventory
Presenting a wide range of inventory leads to customers having more options to choose from. This increases the number of actual buyers than potential buyers, and it appeases consumer needs.
In addition, widening your inventory also widens your target customers. Replenishing your products is also a must if you don’t want an unsatisfied customer walking out of your store.
When your planning on widening your inventory, it might be useful to turn to invoice factoring. Invoice factoring is a financial transaction which entails a business to sell its unpaid invoices to a third party at a discount. The third party will in exchange fund your business with immediate payments. Thus, allowing you to immediately grow your inventory.
Right Lending Alternative for Starting Capital
When building your business, the first financial aspect that you should always consider is the starting capital. As one of the foundations of your business, a starting capital is where you can get the money to buy what you need before starting your business. Some examples of such expenses are starting equipment, hiring of workers, or advertisement.
One of the sources of business funds, is an angel investor. Although hard to find, angel investors are people with extra wealth that want to invest in a business that they feel they can profit off of. To attract a potential angel investor, it is advised that you make and present a detailed plan of your business.
Right Lending Alternative for Working Capital
Working capital is the amount of money that you use for day-to-day operating expenses. Basically if you lack the working capital, your business cannot run. Such expenses may be your electricity, water bills, delivery expenses, or emergency expenses.
When your business lacks the working capital, short-term financing from online lenders is a way to go. Short-term loans have shorter repayment periods than other types of loans. Because of its fast loan application, online lending has become popular. When the need for money is urgent, consider online loaning.
Right Lending Alternative for Equipment
Especially if you are in the manufacturing business, investing in business equipment is necessary. The need for funding your equipment arises when such equipment is broken and might need to be replaced. Another reason why you should consider loaning for the sake of your equipment is the need for an upgrade.
A lending alternative that fits such need is utilizing business credit cards. It makes it possible for you to purchase business-related equipment. It works like a personal credit card. However, be careful, because those credit cards have higher limits so they tend to have higher interest rates.
Trying out lending alternatives isn’t always a bad thing. Consider what you are loaning for and try out what suits such needs. As long as you always plan out how to pay for the money you borrowed, you can turn that loan into an opportunity for your business to grow.