Running a business is one thing. Sustaining it is a whole other challenge. It requires meticulous cash flow management and availability of capital. At one point or another, every business finds itself in a tight financial situation. Sometimes, at no fault of their own.

Whether it was uncontrollable economic changes or slow-paying customers, there comes a time when it is necessary to seek outside funding to keep operations running smoothly. Many business owners first turn to a bank loan. However, there are many alternative lending options today that business owners should consider.

Before setting your sights on any one option, it is important to make sure your business is prepared. Here are a few tips that will ensure you have everything you need to make the most of your time and efforts in securing funding.

  • Identify the exact need requiring a loan

What situation, opportunity or challenge is creating the need for additional capital? Rapid growth in your business? A sudden large or multiple orders? A great business opportunity? Once you identify the specific need, you will be able to determine which type of loan will work best (merchant cash advance, invoice factoring, microloan, SBA loan, crowdfunding, term loan, etc.).

  • Determine how much capital you need

The next step is to decide how much capital you need to borrow to fulfill that need. This is incredibly important, since borrowing too little or too much can quickly turn into a problem of its own. If you borrow too little, you risk liquidity problems. If you borrow too much, you risk being declined for funding. Ultimately, the amount should still allow for a healthy balance sheet at the end of the day.

  • Research what type of financing you need

For the sake of your business’ long-term financial health, you need to become your own small business financing expert. There are many options available today. You need to make sure you’re choosing the financing option that provides a quick infusion of cash, without risking your business’ financial health down the road. Take some time to research traditional options like bank loans and SBA loans and alternative options like a merchant cash advance and factoring.

  • Decide which lender you should partner with

Another big decision, you will want to make sure the lender you partner with really understands your business. Every industry faces its own unique set of challenges. And every business has its own needs, obstacles, goals and opportunities. Make sure the provider specializes in your business type and industry and has a dedicated, experienced support team. Consider the experts at First American Merchant.

All in all, make sure you consider the needs of your business, the amount you truly need and the reputation and background of the lender you partner with. Taking all of these details into consideration will ensure you make the best choice for your business’ growth and success.

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