Lucky for you, the business financing scene is growing fast, offering effective funding ways for different business types - a short explanation about each one might help you choose more wisely.
So if you're wondering what the best option for you might be, consider these 5 great ways we've outlined for you, ready? Let's start.
Merchant cash advance - This funding method is fairly new and considered innovative in the finance scene. Fresh as it may be, the emance popularity it's already gained with retail businesses and the leisure sector is absolutely phenomenal. To make a long story short, the merchant cash advance is a lump sum loan that you get in exchange for a fixed percentage of your daily credit card and debit card sales - the lender gets a cut from these until your debt is paid. This way you actually you pay more when business is good, and less when business is slow, making it a quick and easy funding solution for many SMEs.
Equipment financing - A method in which a loan or lease is used to purchase or borrow different kinds of equipment for your business. This could be any physical asset, like office furniture for example. In equipment financing, the purchased assets act as collateral, so chances for business owners to get approved for equipment financing are fairly high. This also means they won't have to offer separate collateral like with so many other types of loans.
Invoice factoring - This type of debtor finance is a financial transaction in which the business sells its receivables (invoices) at a discount to get up-front pay from a service provider. The method will probably work best for companies that have poor credit since they often fill orders before they're paid. Exchanging invoices for money allows businesses to offer their receivables to numerous factoring companies, banks, and other finance companies. This lets lenders bid on the invoices which can then be sold in a bundle or one at a time.
Purchase order financing - Similar to receivable factoring, purchase order financing is a financial tool with rapidly growing popularity in the lendres market. It offers a short-term commercial finance option for businesses to resell goods at a markup in order to pay their suppliers. This is a great solution for small companies or businesses in which it allows them to accept large orders and adjust the loan basis to their needs. In case orders slow down, they're not committed to this solution and can stop using it at any time.
SBA loans - A loan program by the Small Business Association is a fantastic way for you to help your small business grow. To qualify for a loan of this kind it would require some intermediaries and conditions such as management assistance and training. That being said, the biggest advantage of this program lie within those same training and assistance we mentioned before, often increasing your chances of success.
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