3 Options for Financing a Business With Low Cash Flow
Whether you’re just getting started and need more capital or you’ve hit an unexpected dry period, there are many reasons to need quick financing. There are many reasons your business may be struggling with low cash flow, so you need to determine the best solution for your specific financial situation. In order to overcome a temporary hurdle or propel your struggling business forward, here are three strategic options for financing a business with low cash flow.
If you’re struggling with low cash flow because all your finances are tied up in invoices that you’re waiting to get paid for, invoice financing can be the perfect type of business loan. This option uses your future payments as collateral for a loan. You know you’ll be paid, but you need to wait for 30, 60 or even 90 days to receive payment. In the world of small businesses, 90 days can mean the difference between a thriving company and a company with zero cash flow.
Although invoice financing requires you to give a portion of the profits to your lender, it can be a quick and easy way to get cash promptly. You’ll be able to supplement your working capital and keep your business running smoothly.
Another type of asset-based business loan is equipment financing. This option allows you to use your existing equipment as collateral to take out a secured loan. Having a secured loan typically means lower interest rates, no credit checks, and an easier and faster application process. If you have equipment that has a lot of potential value, this can be a great way to get the short-term loan you need. However, this type of financing is usually only available up to the value of the equipment. This can limit the amount you can borrow, and you risk losing valuable equipment if you can’t make payments on time.
The fastest and most convenient option is a business credit card. Unlike a business loan, a credit card is a perfect way to handle the day-to-day unknown expenses your small business may face. Due to the high interest rates, you won’t want to put large lump sums on a credit card. However, this is the most flexible and responsive option available for a small business.
Whether short-term slow seasons or long-term growth potential are causing your low cash flow, take advantage of these three great options for boosting your working capital. With a short-term business loan, your small business could be on the road to a bright and successful future.