Available Funding Options
Money is the starting tool for every business. A considerable capital will determine whether a company will succeed or fail. Even though your business made it to the opening and the sales were good during the first few months, there may be a time when it will need emergency funds. There are several types of financing options available that can finance your business needs.
Bank Loan
Bank loan is a common source of funds for businesses. You can avail secured or unsecured loans from banks that may either have variable or fixed rates of interest. However, there are strict guidelines applied with bank loans and they don’t often grant loan applications from small businesses. Because of the current economic status, banks are seldom offering unsecured business loans to small and medium companies.
Bank Overdraft
Bank overdraft is a type of loan that is done by withdrawing an exceeding amount from your current account balance. It is synonymous to “overdrawn” cash. You may use this type of funding for your business as an intentional short-term loan. The payment for bank overdrafts will be taken from the associated fees which are applied in your next deposit.
Home Equity Loan
You can also use home equity loans to get funds for your business. This type of loan will consider your family home as collateral. However, using your family home just so your company will get funded is quite risky. Before deciding to get a home equity loan, take time to carefully consider the possible risks that may be involved.
Merchant cash advance (MCA) is among the most ideal sources of funding for small businesses who process credit cards. Business cash advances are carried out through credit card processing. With this type of small business funding, you can get your company funded even if you currently have bad credit score. The merchant cash advance provider will get a percentage from your future credit card transactions as a way to repay the cash advance. The business owner is not required to provide collateral to the merchant cash advance lender, and there is a limited amount of paperwork needed to be approved for an advance. The business owner will need to submit recent credit card history and bank statements to the cash advance provider. This is so the merchant cash advance company is able to project future credit card sales and determine the fee that will be used to pay back the advance.
When it comes to small business funding options, it is best to pick an option that funds easily and quickly without high risks. That way, you will minimize the risks you face both personally and as an owner of your business.
