Today, I will be discussing 4 different sources of capital for your small business to help you grow and expand. Also, I will be talking about our exciting upcoming event,“How to Find Capital,” on Monday, April 13th at 4 p.m. EST.
Here are 4 different sources of cash to grow your business.
1. Traditional Financing
Traditional financing is where you would take a trip to your local bank. Usually, this would be for some larger projects where there is a business plan or you are a business who has been around for a longer period of time with some personal credit, business history, and have acquired assets. The two main factors that are considered during this process are business performance and personal credit. The pros to this kind of financing are the low interest rates and the longer time frame to pay the money back. However, once you are approved, it takes about 60 to 90 days to secure the financing you need.
For my upcoming live event, I will have Steve Koval, who is my personal financing consultant for Transaction Expert as well a partner at B2B CFO Services, as a special guest. Steve has over 34 years of experience dealing with banks and other financial institutions. He will be giving us more specific information about traditional financing and exactly what these banks are looking for.
2. SBA Loans
Even though these are similar to traditional financing, there are lower requirements because you are going through the government. During our live event, we will cover how to qualify for an SBA loan and what the next step would be in order to receive it. We will also be discussing different types of government funding that are available such as tax credits.
These next two sources are more for short-term working capital needs whether its an opportunity to grow your business or a situation where you can purchase something for your business at a discounted price.
My other special guest, Hellen McQuain of Strategic Funding, will be covering some of the non-traditional loans available. Strategic funding has given out over $500 million to small business owners. With her vast experience, Hellen will go over when it would make sense to look into a non-traditional loan and the requirements to receive one of these loans.
3. Merchant Cash Advance
A cash advance is a form of short term working capital that our merchant services company offers to clients. It’s pretty simple. You are actually selling your future credit card processing sales. The benefits are that you receive the money quickly, there aren’t many requirements other than having some credit card processing volume, and you do not need any personal guarantee. You do need to make sure your credit card processing volume is steady. A cash advance is usually funded within only 3 to 5 business days which is much faster than the traditional loan. However, the interest rate will be significantly higher because of the greater risk.
4. Non- Traditional Financing
Non- traditional financing involves something like a receivable loan or a ACH loan. These are revenue based financing. For example, a company like Strategic Funding will look at your over-all revenue or if you have recurring revenue. Even if your business may not be processing much credit card volume, it is raking up a lot in revenue, which is what these types of financing focus on. Like the cash advance, this is not based on personal guarantee, but the revenue based financing can benefit those who have more of a business to business approach. Once again, there are less constraints for business owners and interest rates are increased.
No matter where your business is at right now, it is important to be aware of all 4 types of financing because during the life of your business, you may need both types of financing. As your business grows, you will end up going toward the more traditional route, but when unforeseen situations happen, there is the non- traditional option.
Don’t miss out our special live event Monday, April 13th at 4 p.m. to learn even more about these sources so your business can grow and expand to it’s fullest potential. Register HERE!