As the holiday shopping season approaches, it’s only natural for small business owners to pile up stocks to anticipate the rush. Unfortunately, not all owners has the privilege to do this due to the capital constraints.
Some try to borrow from the banks with no luck; some even look to friends and family for help, but as cash is tight for many of us, it’s often no longer a viable option.
Whether it’s for the shopping season or simply to keep your shelves full all year long, you need a solution – fast. Well, fear not, because this article offers you 5 creative financing options for you:
1. Business Cash Advances
Are you receiving payments via credit cards? Then you might want to consider business cash advances, which allow you to get an “advance” based on future credit card payments.
With that being said, you obviously need to show some track records in order for the financial institution to project your future receipts.
2. Invoice Factoring/ Account Receivable Financing
I know I want my products/services to be paid in full – in cash. But unfortunately, things don’t always work that way; accommodating payment term for your customers and clients mean you need to wait for a certain period of time in order to get paid. The account receivables often put so much strain on your small business’ cash flow.
There’s a solution: You can sell your invoices to a factoring firm at a discount and get cash immediately. Factoring accounts receivable gives you risk-free, quick financing for your business.
3. Credit Unions / Building Societies / Mutual Banks
Banks should be small business owners’ best friend, but as it’s more and more difficult today in getting their loan application approved, they need to find better solutions.
Enter building societies and the similar counterparts, credit unions and mutual (or co-op) banks found in the UK and several other countries. Building societies, like Nationwide Building Society in the UK and NPBS in Australia, are essentially different from banks: Unlike banks which are owned by stockholders, they are owned by their members.
The upsides: Attractive rates and access to specialized services. Moreover, you will receive better treatment, even get advice for your financing needs. You might also want to consider this trend: A poll reveals that building societies are more trusted than banks.
4. Social lending
Social lending is rising in popularity. Peer-to-peer lending sites like Prosper and Lending Club let you post what you need, along with the interest rate you are willing to pay – and get the fund from other members who are interested in your need/cause/project.
Similar to peer-to-peer lending, you might also want to consider crowdfunding, which is great if you are raising fund for your startup or project. Kickstarter, IndieGoGo and similar others provide platforms in which you can post your projects and raise money from backers.
5. Vendor / Supplier Financing
Did you know that you can ask for a line of credit from your suppliers? They are not normally offering this as an option, but many are open for the financing talks.
You can discuss vendor financing as part of your deal negotiation. This is a win-win arrangement, really: You get the supplies now and pay in increment later, your vendor can close the deal quickly in exchange for future payments.
The financing options above are accessible; what you need to do is to take action and act fast.
Be sure you do your due diligence: Start exploring the options; ask around about the options; choose the most suitable for you and your business.