Whether you’re a startup or an established business owner, you understand that you will need capital at some point to grow. This funding can come from a variety of sources. But before you pursue any type of business funding, it’s a good idea to learn about your funding options, outline how you plan to use the money, and how you will repay it.
The good news is that your business will probably have several choices. Which one you choose will depend on your current needs as well as the status of your business. Here are your different funding options and some of the things you’ll need to consider for each one.
The U.S. Small Business Administration (SBA) is an excellent resource for small businesses that need assistance with business plans, mentoring, and securing financing for expansion. The SBA guarantees loans made by banks rather than loans the money itself. However, these loans can be tough to get, and they require that you be in business for at least four years just to apply.
If your business needs funds for a short-term need, a short-term loan might be a good option. The loan terms are usually between three and 18 months and range from $2,500 to $250,000. Some lenders will want to see a minimum annual revenue and proof of at least two years in business.
Credit cards are probably the easiest option for business owners to access funding. But they aren’t the best. The cost of capital is generally the highest of any funding source, and the amount you can obtain is probably going to be based on your personal credit.
Business Lines of Credit
A business line of credit is a flexible and simple-to-use funding source for small businesses. Your business will qualify for a certain amount and can draw on those funds whenever it needs them for things like working capital, payroll, or unexpected expenses. There may be annual revenue requirements for this type of funding.
Accounts Receivable Financing
Also known as factoring, accounts receivable financing is a common way for small businesses to unlock the value that their business already has. Your company can leverage its outstanding accounts receivable to receive early payment in exchange for a small fee.
If your business needs any type of equipment, including technology, equipment financing has become a popular option. Your lender purchases the equipment and leases it back to your company at favorable terms.
Discuss Your Business Funding Options with CAB Capital
As you can see, your business isn’t limited to just one type of funding. If you are interested in learning more about your options, CAB Capital can help. We help small businesses find alternative lending solutions that meet their particular business needs. Contact us today to schedule a free consultation.