The economy has had its ups and downs recently, but seems to be improving with uncertainty. For some this may be a good time to consider expanding your business and hiring more employees.
However, since your money is already invested in your company, chances are you still need additional working capital. This may prove easier said than done. In this questionable, albeit recovering economy, banks are still hesitant to lend money to businesses with less than stellar credit.
When major banks won’t lend you money, it’s time seek assistance from alternative funding institutions for example finance companies, credit unions, brokers and other specialized lending organizations. With these providers, approval is easier than with the traditional banking establishment, although certain parameters still must be met. Consider your financial options and how you can be sure to lock in the necessary funding.
Quick Term Loan
One alternative form of funding is a quick term loan from an alternative funding company using private money. These short term working capital loans can be obtained quickly and with a minimal amount of paperwork. Consider the benefits:
- Lenders are reporting to business agencies, thus helping to reestablish a good business credit rating for your business when the times banks open up again.
- The quick term loan is also tax deductible.
- The repayment terms have recently been longer. Historically, bridge loan term is no longer than 12 months, but now unsecured term loan can extend for up to 18 months. And, after the term loan is paid down to a certain percentage, refinancing is available. Again, there is no additional collateral required to secure a term loan.
Merchant Cash Advance
Another form of funding is a merchant cash advance, which is very popular with retailers and restaurants that do a high volume of credit/debit card business. With merchant cash advance, you can get almost immediate and, more importantly, unsecured working capital. You can also benefit from:
- No personal guarantees or collateral pledges are required. I.e. your home.
- The usual method of repayment is by automatic withdrawal of a percentage of your daily credit card sales. This works in the merchant’s favor as, on slow days, a lesser amount is withdrawn
The down side to this type of funding is that, although money is leant and paid back, the transaction is never reported to any of the credit bureaus.
Here are some ideas to help improve your chances of approval:
- Have a positive cash flow. Maintain positive daily and monthly bank balances to minimize NSF’s
- Improve your credit history. Traditional financial institutions weigh this very carefully when considering lending money.
- Contact the Small Business Administration or other like agency and speak with a lending specialist or counselor
- Create a solid comprehensive business and marketing plan, showing you have done your research
- Have the cashflow to show how you intend to repay the loan – revenue generating use of working capital
- Establish good relations with your lender – good payment history with no liens is helpful
Following these tips will increase your chances of getting a loan and along with interim alternate financing can help repair your credit. Consider all your options to have the best chances of getting the funding you need.
Photo credit: moorecommerce.com
Bio: Liberty Capital Group, Inc. specializes in providing various types of funding for small to medium sized businesses. The underwriting specialists can help you get the financing you need in a timely manner and speed you on your way to a better credit standing. Contact Liberty Capital Group 888-798-3976