Starting up and running a company is costly. At some point, almost all business owners realize that they need outside financing to be able to handle the rent, employee salaries, and other expenses. Here are some strategies that can help your company obtain financing and remain prosperous.
Obtain Loans Backed by Collateral
Traditional bank loans can be difficult to obtain unless your company is already well established and has a steady cash flow. However, even startups that have not yet been able to build a strong credit score can qualify for collateral-backed loans. This form of financing allows you to obtain the funds you need using your equipment, invoices, or other tangible assets as collateral.
Use Business Credit Cards
Business credit cards function as revolving lines of credit for companies that are just starting up. You can earn rewards while you make normal business expenditures. If your credit score makes it difficult for you to obtain a traditional card, start with a deposit-backed secured card and use it to build your credit score.
Look into Grants
Although the approval process for grants is extremely competitive, it is worthwhile finding out if you qualify for this form of financing. Unlike loans, grants do not need to be repaid. There are location-based grants available in various industries for veterans, women, minorities, and other specialized groups.
Set Funds Aside for Emergencies
Even if monthly expenses use up most of your profits, set aside a percentage every month so you have something on hand in case of unforeseen costs or extreme emergencies. Business savings accounts earn low interest but allow ready access to cash, while certificates of deposit set your funds aside for a predetermined time period but provide higher interest rates.
If you have managed to improve your business credit score and are dissatisfied with the terms of your current loans, perhaps you should consider refinancing. This involves using a new loan to pay off your present debt. Only take this step if the terms of the new loan are more beneficial.
For more advice on business financing, contact Pendleton Commercial Financing.