When you’re suffering with cash flow problems and consider alternative finance for your business, there are a few options available. It mostly depends on what the money is needed for, the size, type and life stage of your company, your (and your company’s) credit rating, and how much you need. Do you know which form of alternative business finance is right for you?
Business Loan –
A quick business loan could help when you need:
– A flexible and quick solution that can be repaid in convenient, fixed installments.
– A cash injection to:
o Buy new equipment
o Buy new machinery
o Buy company vehicles
o Fund a marketing campaign
o Fund seasonal fluctuations in trade
Certain quick-loan companies can provide different amounts for different needs, offering fixed rates and flexible loan terms. Be careful here – some online lenders are not so scrupulous. You’ll do better with a local banker you can trust.
Peer to peer lending –
Peer to peer lending could help when you:
– Need to fund a specific project
– Have more time on your side – you can’t get money in your bank within 24 hours
– Are not worries about flexibility – more people are involved and terms are rigid in terms of extending
– Have been in business for at least 2 years
If you are suffering cash flow problems, peer to peer lending may incur higher interest rates.
Asset-based lending –
Asset-based lending could help when you:
– Can fund expansion based on your current assets
– Need to grow your current business
– Need to purchase new/additional property
– Need finance for exporting or importing
Some companies will provide funding in situations where you are struggling to gain business finances from your bank. They can take a different view on longer-term asset-based finance and look past short-term cash flow problems to consider overall business viability when lending.
Invoice financing or Factoring –
Invoice finance could help when you need:
– Quicker access to cash then your payment terms allow for
– To borrow more than a traditional overdraft would offer as a safety net to cover fluctuations in payment
Some companies allow you to borrow up to 85% of your invoice value immediately, releasing cash that you are awaiting to aid your every-day working capital.
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