While more and more people have been breaking away from the usual working routine in order to set up their own business, one thing that many have found is that finances can be a real challenge.
When you start a small business, you have to find the money you need to get everything set up and purchase any equipment and other products that you need to operate. However, you also need to have a healthy cash flow or at least access to funding should the need arise.
Cash flow can be a big problem for small businesses, often because they are left waiting for payments from clients and customers. In the meantime, if the need for cash arises is can be difficult to determine how to handle this because there is no excess cash in the kitty to fund emergencies. This is where you need to think about the options that are open to you.
What are the different options?
The options that are open to you when it comes to finding money to solve cash flow problems for your small business will depend on various different factors. This includes sales and profits, your business credit score, and how long your business has been in operation. There are various options that you may be eligible for but these are ones that you would need to look at more closely before you determine whether they are right for you. Some of the possible options include:
- Credit card: You may be able to get a business credit card that you can use to ease cash flow problems if they arise. There are various different credit cards available for business and the credit limits will vary based on your circumstances and finances. If you have damaged credit, you may be able to look at the variety of credit cards for people with bad credit. However, the credit limit on these tends to be lower while the interest rate is generally higher.
- Business loan: If your credit is not damaged, another option you could look at is a business loan. You may be able to get a short or long term loan from your bank or another lender, although you will need to provide information regarding company figures in most cases. You should always ensure that you can meet the repayments on any business loan that you take out – remember, the rates and repayment terms can vary from lender to lender.
- Revolving line of credit: Another possible option you may be eligible for is a revolving line of credit for your business. Again, this is something that you would need to speak to your bank or another lender about to see if it is a viable option. It offers greater flexibility than a regular loan so a lot of people prefer this option.
One more option you may want to consider is invoice factoring if you have outstanding invoices that are due for payment. While you will get less than the invoice amount, it will still help to solve your immediate cash flow issues.