Many businesses need to secure financing for various reasons. The type of financing your business uses will depend on a few key factors — how and when the money will be used. The right fit for business financing won’t be the same for every business. Here are some of the reasons your business might need funding and some options for matching business funding to your needs.
Typical Reasons Businesses Need Funding
Having access to funding is essential for most businesses. Here are some of the top reasons why this is the case:
1. Cash Flow Issues
According to a U.S. Bank study, 82% of failed businesses are due to poor cash flow management. When a business does have the cash on hand it needs to pay its bills, this can create severe hardship.
2. Seasonal Downturns
Some businesses, like those in tourist areas, make more money during certain times of the year. In the off-season, they may struggle financially and require funding to pay the bills.
3. Changing Business Needs
A business may require financing to deal with changing business needs. Perhaps outdated equipment needs updating, or it’s time to invest in a comprehensive online marketing campaign.
4. New Opportunities
Businesses often look for funding to take advantage of new opportunities, such as opening a new location, hiring more staff, or expanding product offerings.
Matching Business Funding to Your Needs
Finding the perfect fit for business funding is a combination of your needs and business situation. For example, a startup may not qualify for the same types of business funding as an established business. Or, you might not wish to take out a short-term loan to finance a long-term obligation, such as a real estate purchase. Here are some of the most common options.
1. Bank Loans
Traditional bank loans are a starting point for many businesses. If you qualify, you may be able to access equipment loans, short-term loans, and other financing at favorable rates.
2. SBA Loans
There are multiple types of SBA loans available, which can be used for a wide variety of purposes. The downside to SBA loans is that they have a lot of requirements and take a long time to fund.
3. Merchant Cash Advance
If your business has receivable, a merchant cash advance is an excellent alternative financing option. You receive a cash advance on your outstanding receivables in exchange for a small percentage of your future sales.
4. Business Line of Credit
Instead of using a personal or business credit card for financing, you may be able to set up a business line of credit to use for business expenses. Lenders may require that you pledge certain business assets as collateral.
5. Working Capital Loans
Some lenders offer secured and unsecured working capital loans, which can help your business cover occasional cash shortfalls.
Contact CAB Capital for Your Business Funding Needs
A bank loan may be the ideal option to fund your business. But, if you find you need something different, there are many other options. CAB Capital has access to a wide variety of business financing opportunities that are more flexible and can get your business funded much quicker than a traditional bank loan. Contact us today for more information.