Financing Options for Increasing Cash Flow
Almost every venture is likely to face cash flow issues at some point in its lifecycle. Your business can face challenges bridging the cash flow gap, especially if it makes several seasonal sales. However, cash flow challenges don’t have to be a death sentence. You can consider some outside financing options to bridge the cash flow gap and redirect your energy towards business growth. Here is a list of options you can choose when you feel cash-strapped.
Line of Credit
Lines of credit can offer your business the access to cash required to finance working capital needs or make investment opportunities. Credit lines are often cheaper than other financing options like credit cards because they charge lower interest rates. You can use lines of credit to make periodic cash payments to contractors, vendors, and suppliers that don’t use credit card payments.
An Invoice Financing
You can opt for invoice financing options to access advance payments on unpaid customer bills. Invoice financing is often a quick and easy way of increasing your business cash flow. The payment period can range from 12 to 24 weeks, depending on the repayment schedule you choose.
Business Credit Cards
You can use business credit cards to finance short term needs. These cashflow loans are often easy to access. However, it would be wise to consider a business credit card loan for smaller cashflow gaps or less capital-intensive projects because of their high-interest rates. You can use this cash flow financing option to increase your short-term purchasing power, grow a business credit score for small businesses and cover operational costs that can be paid within a month.
Merchant Cash Advance
A merchant cash advance is an advance payment against the future income of your business. The provider offers you a lump sum amount that you can pay using a percentage of the daily credit card receipts of your company. The terms of a merchant cash advance can range between three and 18 months, depending on the terms of this financing option.
SBA Loans
You can increase your cash flow by applying for a small business loan. However, these loans are often available to startups. It’s wise to adequately prepare for the SBA loan application to increase your approval chances. For instance, you may need to submit a business plan and have a precise use of the funds if you want to qualify for small business loans.
There is no point in letting your business sink as a result of cash flow issues. Since you are familiar with some funding options, you can research for a suitable alternative. With cash at hand, you can stop worrying and focus on growing your business.
