I spent my 20s mismanaging my money, and came to regret all of those impulse purchases placed on credit cards when my credit score plummeted due to missing a few payments. I didn't learn how much this would affect my life until I was denied for both an auto loan and mortgage in the same year due to my bad credit score. I spent the next few years cleaning up my credit report and putting every extra penny I had toward old debts. Having to put my impulse spending on halt was difficult at first, but it was a great learning experience and I now realize how rewarding saving and investing money really can be. I have put a lot of research into good money management techniques, so I decided to start a blog to share what I have learned with anyone who needs help!
It can be difficult for a small business owner to borrow money to expand his or her small business, but it is something that many business owners face at some point. It can be especially frustrating when there is a clear path to growth, if only you had a new piece of equipment that will enable you to generate more revenue. The following are three possibilities to get an infusion of cash for your operation.
Taking on an investor
If you're a sole proprietor, it may be possible to solicit one or more investors in your company. For a specific amount of money, you can sell a portion of the ownership of the business. In essence, you are taking on one or more partners. If the possibility of growth is good with additional money to invest in capital equipment, there may not be any problem getting these investors. And you will not owe any money because you are not taking on debt. But there is also a downside. Not every sole proprietor is ready to take on partners.
A traditional business loan
There are two things you need with a traditional business loan: at least an average credit rating and collateral to secure the loan. If you have equipment or other assets that are paid for, you may be able to use them as collateral. If your business is small enough, a bank may take personal assets to secure a business loan as well. Of course, the downside to this latter form of collateral is that you are betting personal wealth in the future of your company. It is also possible for certain businesses to use their accounts receivable as collateral for a business loan. Due to the nature of their product or service, some businesses are slower to collect on their purchase orders.
Getting a merchant cash advance
There are lenders, such as Fordham Capital, that specialize in quick loans for a business, and often these loans are not secured. The loans are paid back with customer credit card transactions. Basically, the lender provides a certain cash amount to the business owner, and the money is then paid back in small increments. A small percentage of each credit card transaction goes to the lender. This type of loan has become attractive to many business owners because a businesses credit rating is usually not an issue. In addition, if your business takes a lot of payments by credit card, the loan can be paid back quickly. However, because these loans are not secured, the interest rates tend to be higher than that of traditional business loans.
All three of the options listed above may be possibilities for your cash needs. Which option is best will depend upon the nature of your business and your specific circumstances.
Share31 March 2017
