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There may come a time when you require an expert’s assistance with your business finances. You may need a helping hand with purchasing new equipment, someone to provide funding to tide you over until invoices are paid, or even a short-term loan to manage a larger-than-normal order.
Whatever your requirements, there’s great value in finding out more about the following business finance options:
Invoice Factoring
The term ‘invoice factoring’ might be new to you, but it can undoubtedly be worth delving into. Invoice factoring is the process of ‘selling’ some of your outstanding invoices to a company to improve your cash flow while benefiting from a more stable revenue form.
This option is particularly popular with small businesses that require a steady stream of income. Instead of waiting for the money to come in from your customer, your customer can pay your invoice factoring company directly while you receive the money, minus a nominal fee, in advance.
Equipment Financing
Being a business owner can be complicated. You may know you can dramatically increase productivity and profits, but you may not have the necessary funds to secure equipment to make that happen.
In such cases, it can be worth turning to equipment financing. This form of business financing allows you to buy the equipment you need to ramp up your business operations significantly. The equipment acts as collateral against the loan.
If you need to upgrade your technology to maintain a competitive edge in your industry, this financing option could be the solution. However, it’s important to shop around for a competitive interest rate to ensure it’s going to be worth your while.
Crowdfunding
It’s not always easy to find an affordable finance option for your small business. Still, crowdfunding certainly appears near the top of the list. This funding type allows anyone to invest in your business in a unique way.
There are four prominent crowdfunding types: debt, equity, donor, and reward-based. All have their pros and cons.
Debt crowdfunding involves raising money through various avenues to pay down your debts. You can then pay back that money over time. Essentially, it’s an alternative loan type that’s less restrictive than those you’d receive from your bank.
You may also go down the equity crowdfunding route, which allows you to sell parts of your business equity to investors. They can then receive something for their money, such as stocks and convertible notes.
One of the least popular options is donor crowdfunding, where individuals can donate money to your business. Its lack of popularity comes down to the fact that it doesn’t seem to work as effectively as other crowdfunding methods.
Finally, you may like to try reward-based crowdfunding, which means you offer rewards like branded products in exchange for a monetary contribution.
Merchant Cash Advance
Any small business in need of quick cash may like to look into the prospect of a merchant cash advance (MCA). This type of loan is akin to a paycheck advance, but for businesses rather than individuals.
The MCA is offered against your future sales. You receive a lump sum payment, then pay it back with each customer sale over a period of up to about 18 months.
Small business owners often find themselves facing significant hurdles. Nearly all of these challenges will involve money – and not having enough of it. With this in mind, it’s a relief to know that many business finance options exist that can solve the financial woes you’ve been concerned about. The right finance strategy will allow you to focus on managing your daily operations and growing your business.
