Securing business funding is commonly associated with start-ups but it’s just as important to established small businesses too. Funding can enable you to expand, take on new staff, or bid for bigger projects. It can allow you to purchase new machinery or stock that can increase your production, efficiency, or sales revenue. But the funding environment has changed in recent years so it can sometimes be tricky to know where to start. Should you stick with traditional financial institutions or try your luck with crowdfunding sites? Go for an SBA loan or merchant cash advance? In this article, we look at the business funding landscape for 2019 and summarize the top solutions for you to consider.
Small Business Loans
Small business loans are nothing new in the funding scene but you do now have a wider choice than ever. From government-backed small business administration (SBA) loans to online lenders, there are varied options to suit any need for the savvy business owner. In the past, you may have found yourself restricted to traditional banks but there’s now a new breed of online funding partners that are leveraging digital technology.
Online lenders are ideal for small businesses that need funds quickly and don’t want to waste time with mountains of paperwork. Because they process everything digitally, online loan providers tend to provide a faster service than traditional banks or SBA schemes. They also have more flexible application requirements and streamlined processes. Online partners are ideal for businesses who don’t have perfect credit scores or those that have only been operating for months rather than years.
Equipment financing will continue to be popular in 2019 as more and more businesses tap into its many advantages. It can enable you to access the latest technology without tying up large amounts of capital, increasing efficiency and boosting production along the way. By using more efficient and effective equipment you’ll be able to complete projects faster and to a higher standard too. All of this directly improves your bottom line so that your business becomes more profitable.
One of the key benefits of this type of equipment funding is the lack of personal security that’s needed. The equipment itself acts as the collateral so that is what’s repossessed if you fail to make repayments. This can make it an ideal funding solution for small business owners with a poor personal credit or those who don’t have a house or car to use as collateral.
Equipment financing can also have tax advantages over other types of small business lending. Some types of leasing solution enable you to take depreciation, which isn’t usually possible with small business loans. However, other equipment solutions don’t support depreciation but tend to have the lowest payment options. At the end of the leasing term, you may also have the option to buy the equipment outright if you have the funds available.
Business Lines of Credit
Securing a business line of credit can be an excellent short-term funding solution. It offers a lot of flexibility since you can dip into it whenever you want and only pay interest for the time that you use it. This can make it more appealing than a business loan for many companies since you’re not locked in for any fixed term. Once it’s repaid you’ll no longer be liable for charges, even if it’s earlier than you originally forecast.
This type of business funding operates in a similar way to a credit card but typically has a higher credit limit. Its flexibility allows you to address seasonal cash flow needs or inject working capital when you need it. However, they can be more tricky to qualify for than a business loan so you’ll need to have a solid credit history. It’s an excellent small business funding option if you can access it but not one to draw on for the long-term.
Invoice financing is a practical business funding option if clients don’t pay you quickly enough. Delayed customer payments can play havoc with your cash flow, which is the most common reason that businesses fail. But invoice financing (also known as accounts receivable financing) allows you to tap into the cash that’s tied up in the invoices and inject it into your business.
With invoice financing, the lender buys your unpaid invoices at a reduced rate. You are then able to reinvest the cash into your operations, using it to pay bills, fund payroll, or expand your business. The lender then follows up with the client for payment so you don’t need to worry about chasing late paying customers. Although you don’t get as much money as you would from the client directly, you get access to the cash faster and have all of the hassle removed. One of the key benefits is that lenders aren’t usually concerned by your credit history – instead, they focus on whether your clients will repay what they owe. This makes it a viable option for those with an extensive client list but a less than perfect credit score.
Crowdfunding has disrupted the venture capital industry and enabled small businesses to raise billions in finance. But it’s not a silver bullet so needs to be considered carefully before jumping in head-first. It takes a lot of up-front work to launch a successful crowdfunding campaign and there is no guarantee you’ll raise the funds you need. The best campaigns usually employee a marketing expert with experience of creating persuasive content, including videos and photography. All of these costs can quickly add up which makes it a risky option with no guarantee of return. However, the key benefit is that you don’t need to pay the money back directly. Instead, you repay investors with your products, services, or exclusive perks that aren’t available to the general public. So, if you’re prepared to put the work in upfront and deal with the risk, it may allow you to launch your business debt-free.
Best Funding Solutions for Small Companies
There are plenty of funding solutions for small companies looking to grow. Small business loans, equipment financing, lines of credit, invoice financing, and crowdfunding are all exciting options for 2019. Depending on your credit history, time-constraints, and the funding amount you need, you may find that some are more appropriate than others.
With any type of financial decision, it’s important to calculate the total cost of borrowing so you understand which option is best. Ask friends and family for feedback on banks and online lenders that they’ve used, and research genuine customer reviews to get an idea of customer service levels. This will ensure that you choose the most cost-effective and best-quality business funding for your company.
How We Can Help
Strategic Capital provides business finance to a wide range of organizations across the USA. Whether it’s to pay for your everyday costs, emergency repairs to equipment, or investing in expansion, we offer small business financing solutions without the hassle of traditional banks. Best of all, you’ll benefit from competitive terms and a simple application process, so you’ll soon have more money to reinvest into your business.
Transparency, innovation, and expertise are the driving factors behind everything we do. With a talented team of advisors, a plethora of funding partners, and the best technology available – we go above and beyond to help our clients receive their capital rapidly with the industry’s most competitive repayment options and interest rates. We want to break speed records, not bank accounts.Upon submitting your application, it’s reviewed by a dedicated Capital Advisor. We generate the best rates and terms at lightning speed through our funding matrix and robust lender network. Yep… it’s that simple. Learn more about our business finance and lending services here.
– Bradley Keys
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