Most new business owners at some point in their company’s early growth realize that they need additional financing. The first place that many look to is a bank. However, there are numerous alternative methods of financing as well as strategies to keep your cash flow strong. Here are some tips to assist you in funding your business.
Use Business Credit Cards
Business credit cards function as revolving lines of credit. They are easier to be approved for than traditional loans and enable you to earn rewards as you use them for essential expenses. If your company has not yet built up a strong credit rating, you can place an initial deposit to obtain a secured credit card and raise your credit score by making regular timely payments.
Apply for Grants
Small business grants are essentially gifts that carry no interest and that you don’t need to repay. The requirements for grants are very specific and the competition is intense, but it’s definitely worth doing some research to see if you qualify. To obtain government grants, for instance, you need to have a product or service that aids the public in some way. There are also grants, especially for veterans, women, and minorities.
Your business may not be well-established enough to be approved for a traditional bank loan, but you may be able to obtain a collateral-based loan. The collateral typically consists of equipment or invoices. You receive the financing you need, and the lender has the assurance that the money you borrow is backed by tangible collateral.
If your company already has debt but you are dissatisfied with the terms, consider refinancing. Take this step only if your new loan offers a lower APR, reduced monthly payments, or other financial benefits. Refinancing may be especially advantageous if your business has managed to raise its credit score or has reached some other significant milestone.
Ideally, you will have built up some savings to have on hand for emergencies before you started your business. If not, begin building reserves right away by opening a business savings account.
For more advice on financing for new businesses, contact Capital Connex.