Launching and growing a small business requires access to capital. However, traditional lending channels are tightening their credit and collateral requirements, pushing small businesses to the sidelines. Fortunately, there are quite a few viable alternatives to traditional loans. The small business financing landscape is very large, and understanding how each option works will help you decide which solution is best for your small business.
Term Loans for Small Businesses
Conventional term loans offer long-term financing are a good fit for established businesses with solid financials. Term loans are typically used by businesses that are positioned for growth, either through mergers and acquisitions, real estate investments, or renovations for future expansions.
Short-term loans are used by small businesses that need to overcome cash flow gaps such as smoothing out uneven revenue cycles, preparing for a seasonal rush, or to fill in gaps in capital during a growth period. Short-term loans are not dependent upon excellent credit ratings, and funds are made available quickly and efficiently.
Every business uses equipment of some sort, but the initial cash layout to purchase the items needed can be very steep, especially for new and small businesses. Equipment loans help to alleviate the financial burden by providing the funds necessary and spreading the cost over manageable installments. Similarly, it may make more sense for small businesses to lease equipment in order to get access to the machinery, tools, and software licenses they need without placing debt on the balance sheet.
Accounts Receivable Financing
Most small businesses experience cash flow strains due to revenue that’s tied up in unpaid customer invoices. Accounts receivable financing provides a debt-free solution by which receivables are exchanged for cash. Since funds for invoices are made available in 24-48 hours, accounts receivable financing eliminates the long wait for customer payments and helps small businesses build capital reserves.
Purchase Order Financing
Purchase order financing levels the playing field for small businesses and lets them take on orders that would otherwise go to larger competitors. Purchase order financing is an advance in capital that can be used to cover the cost of ordering inventory or production on large and unexpected client orders. When the order is completed, the purchase order financing is deducted from the client’s invoice, and the difference is delivered as revenue to the business. Purchase order financing does not place debt on the books, and it’s a great fit for small businesses that want to achieve rapid growth.
Unsecured Business Lines of Credit
Unsecured lines of credit provide small businesses with a reliable source of working capital. Because the lines of credit are unsecured, small businesses do not have to put up any collateral to access the financing they need. Unsecured lines of credit are available to both new and established small businesses to help them maintain and grow their operations.
Get the Small Business Financing You Need
Contact Pendleton Financing today, and start exploring the options available for your small business.