Even when you think you’ve accounted for every single possibility, you’re bound to find yourself encountering a circumstance you couldn’t have dreamed of in your business. Cash flow, for instance, is often a challenge, as business owners grapple to maintain a positive cash flow or continue to increase it. But being a business owner is known for these unpleasant surprises, and you need to know how to minimize the damage and keep your business afloat. In short, you need to understand your options for getting an infusion of cash for your business so you can act fast when the time comes.
Every professional has his or her own list of funding dos and don’ts, but we’re talking about far more just business funding advice here. When disaster strikes, you need to know where you can turn for a business loan or other financing options with minimal turnaround time. If you make the right move, you could save your business from an egregious financial hit. Act wrongfully, however, and you might spend the foreseeable future cleaning up the resulting mess. Here are six of the best ways to get cash for your business fast.
Taking out a loan might be your first impulse, but opening up a business line of credit or getting a business credit card might be more efficient. If you don’t already have such an account set up, consider this a good opportunity to get one up and running — especially since approval can take as little as 48 hours. You can access anywhere from $10,000 to $1 million, and funds are often available at a more competitive interest rate than a business credit account (7 percent to 25 percent). Moreover, you can take out more money in a pinch if you need to. The downside? You’ll be at the mercy of your lender, who can reduce or close your credit line without warning.
If you need to get emergency cash now, then traditional bank loans simply are not a viable option. Their approval and processing periods just take too long for a business that doesn’t have time to wait. Thankfully, you have a wide variety of online lenders — including companies like Sky Bridge that offer merchant cash advance options — at your disposal who are eager to provide you with the necessary funding. Sites like Fundbox, Kabbage and QuarterSpot can get you hundreds of thousands of dollars in financing in only a few days. Sure, you’ll likely face additional costs to receive this expedited service — part of your agreement to pay back the financing could include fees and higher interest rates. But if you need to address your cash flow emergency quickly and have less than perfect credit, an online lender is definitely one of the most feasible options.
Less well-known than our first two suggestions, personal installments loans (or cash advances, as they are sometimes known) can be underrated as a financial quick fix in an emergency situation. Once a lender runs your credit score, your business may be able to receive thousands of dollars in just a matter of days. Then you pay it back in fixed amounts over a set period of months or years. Granted, personal installment loans may not provide you with the higher amounts of funding you may need, but for something like faulty equipment, they should be able to get the job done fast.
Family and friends tend to be some of the first places that startups and small businesses turn to for financial assistance — even though this shouldn’t be your go-to solution. Naturally, relying on someone you can trust and have a long-standing personal relationship with is a viable option. But don’t forget to protect both yourself and your business if you choose this route. To prevent future conflicts, be sure to create a contract and have it signed by both parties (yes, even your favorite cousin). Whenever you combine personal and professional interests, you can never be too careful…though you shouldn’t discount the possibility that those who care about you can help your business out. For a similar but perhaps less risky approach, look into online crowdfunding to leverage your social media presence and established customer base.
If you have outstanding invoices weighing you down, you might be able to leverage these into some emergency cash flow. Known as invoice factoring or accounts receivable financing, this involves selling your invoices to a financial company that collects payment directly from your customers. True, you may be forgoing a piece of your profit in favor of some quick cash — but such a move can work wonders for your cash flow. Sometimes, the long-term health of your company and your team requires short-term compromises. Accounts receivable financing is a trade-off, but it’s one that can be instrumental in your company’s long-term success.
While we may not recommend it as your first course of action, home equity loans are considered one of the most useful tools for getting funding quickly. Provided that you have the available equity and the debt-to-income ratio to qualify, lenders may allow you to borrow against 75 percent to 80 percent of your home’s value. Still, consider all your options and the risk inherent in involving your personal residence before you move forward. When done just right, home equity loans can be very rewarding and propel a solid business to that elusive next level. Just don’t rush into anything.
Deciding which funding sources work best for your business will depend on a variety of factors, including your industry and specific financial needs. But any of them will provide near-immediate funding to get your business through a rough patch. That being said, you may have noticed that we did not address allpotential sources of fast funding. These are far from the only options out there, but you shouldn’t allow your need for a fast solution to blind you from the inherent downside that many types of funding present.
With just about any loan, you’re going to have to pay a price for the accessibility and risk involved. But you need to weigh these costs against the benefit. For example, options like short-term payday loans and merchant cash advances might be too costly for your business even in a time of dire need. Nowadays, you have so many prospective lenders at your fingertips that it would be foolish to settle for something that isn’t a perfect fit for your finances.
With the above suggestions in mind, you can be content that you’ll know what to do when you need fast business funding.