Let’s face it! Your chances of staying in business are slim if you can’t manage stable cash flow. In fact, a U.S. Bank study reported that over 80 percent of micro-businesses fail for the same reason. And many would conquer with these findings: because if a firm lacks enough working capital to hold up routine operations, then it is destined for closure. But again, you don’t want to “hoard” working capital as that may slow down your growth. You need to balance your cash flow such that enough funds are allocated to help seize expansion opportunities, and the rest kept to maintain daily operations.
It all starts with knowing your businesses needs, and from that, you can tell how much capital you require. So even when seeking extra commercial funding, don’t under-borrow; it will give you a hard time achieving your dreams goals, and don’t be extravagant too— a huge debt will drag you behind.
Next, check what products the lending market has for you, comparing your alternatives based on how reasonable they are— regarding interest rates and flexibility of repayment plans. Here are two options that will definitely help expand your firm’s bottom line.
Working Capital Loan
This is the ideal loan for healthy businesses and not those struggling with the burden of bad credit. It is the product for a company with steady revenue, perhaps seeking extra funding to maintain more stable working capital. The lender automatically remits this money from your bank account on a day-to-day or weekly basis which allows you to concentrate on your firm operations.
- Enjoy capital up to $250,000
- 6 to 20-month terms for those seeking short-range working capital
- Low factor rate (1.15)
- Automatically deducted daily payments
Unlike a standard bank loan, working capital loans have minimal paperwork and do not need any collateral.
Advantage: They offer instant relief for micro-businesses in that need of additional working capital. But again, these funds are not mandatory meant for use as working capital; you can use it for any other company activities as long as you have a plan to repay it.
Disadvantage: While online loans are way easier to process, you’ll be paying more what you would through banks.
Merchant Cash Advance
Cash advances provide your company with capital by buying a portion of your oncoming receivables (sales). You agree with your lender on what percentage of your sales to remit, and this amount is automatically taken away from your bank account. It’s just the thing for micro-business with variable revenue as the remittances always based on what the merchant can afford.
- Enjoy capital up to $250,000
- 6 to 20-month terms for those seeking short-range working capital
- Low factor rate (1.15)
- Automatically deducted daily payments
Advantage: Unlike fixed-term products that put pressure on you even during low seasons, keeping up with payments is relatively easier because with a startup business cash advance they are remitted as an agreed-upon proportion of future receivables.
Disadvantage: The repayment amounts keep changing which makes it is difficult to plan and predict.
In conclusion
The above loan options are a sure way to achieve quick growth without straining financially. You can get these and other reasonable products from firstamericanmerchant.com and start on your journey to business expansion.