When you run a small business, you have lots of decisions to make on a daily basis. From where to purchase supplies, who to hire, or how to raise capital, you have to make all of these choices. However, it is good to have options! If you are currently trying to choose how to finance your small business, this article can definitely help. Here are the five best finance options for small business owners.
When you own a small business, you are likely to make a lot of personal connections with your customers, coworkers, and clients. One of these people may be interested in becoming your business partner. Having a small business partner can bring you a little extra capital, helping to finance some of your business needs. It can also help alleviate some of the stresses, giving a second pair of hands and eyes to watch over the business.
Short Term Loans
Many small businesses have busy seasons, operating at a high level through one part of the year. If you need instant money to help you purchase supplies or even hire extra people to get you through the busy season, you may want to consider short term loans. These kinds of loans tend to be smaller, have lower interest, and have quick repayment terms, meaning you will be out of debt in no time!
If your business has a loyal customer base or many people who are interested and invested in your success, you may want to consider crowd-funding as a way to raise cash. Utilize an online platform where you can write about your business and why you need cash. Anyone from around the world can donate to your business and, the best part is you never need to pay them back (although you should definitely say thank you!). Be sure to clearly communicate what your business is and why it deserves the money.
Lines of Credit
A credit card can be a useful tool for a small business. You can use it to pay for almost anything, and you can look for a card with cashback options, earning a percentage back as you spend. However, be sure to pay off the credit card balances at the end of each month, paying in full if you are able to avoid interest charges. Credit cards can be useful but also need to be managed well to prevent your small business from going into unnecessary debt.
Small businesses can benefit greatly from invoice advances, which has a service provider give you money based on existing invoices you have. The lender knows that you will be getting the cash to pay the advance, making it a lower risk for them. This is quite similar to short term loans but may be offered through someone other than a bank or online lender. Just remember that the cash you get from an invoice advance will need to be paid back, like most finance loans!