How to Get Financing for Working Capital
How’s your working capital doing? Low cash flow is a leading cause of small business failure, so it’s essential to find ways to improve your situation in order to grow and beat the competition. While everyone dreams of simply having more cash in their account, here are a few ways you can use financing to improve your cash flow and grow your business.
Leverage Your Assets
One way to boost your financing, particularly if you have a low credit score or don’t wish to go into debt, is through invoice financing and factoring. These two financing strategies are very similar and both allow you to improve your financing and access your cash quickly.
Basically, you agree to sell your invoices to your lender for a percentage of the total. Instead of waiting for up to 90 days to access your invoice, you can have funding in just a few days. Of course, you’ll pay a percentage of the total for the service, but money today is more valuable than money in 90 days, particularly if you already have a cash flow situation.
Choose a Line of Credit
If you’re not concerned with short-term debt, particularly if you have great credit and high revenue, choose a business line of credit. A line of credit is similar to a credit card, but gives you access to a far larger amount of capital and comes with impressively low interest rates. Some small businesses struggle to receive a line of credit, since you typically need a high credit score, proof of high revenue and a few years of financial history.
Some lines of credit are asset backed, which can help you receive better terms than your financial history and credit score would otherwise approve you for. Similar to an asset-backed loan, you’ll receive a maximum credit amount based on the value of the property, equipment or inventory you use as backing.
Grow Your Business Today
Whether you choose to use short-term lending, factoring or another financial tool for business growth, financing allows you to avoid late payments, make payroll on time and land large clients that you otherwise wouldn’t have the working capital to assist. Search for financing that’s designed for businesses in your situation to find the best terms and the amount of capital you need. Smooth over any bumpy weeks or months of finances with these financial tools today and continue to grow your business.
