Starting a business and successfully running it is challenging. For example, sometimes you may have an invoice, which means it is your money, but in reality, you don’t have the cash in your hand. Invoices take long before they become cash that you can then reinvest in your business.
Also, starting up a business is demanding, primarily because it requires funding. A study carried out by Wells Fargo Small Business Index, indicates that to start a small business, you might need up to $ 10,000.
However, funding a business has been simplified in recent years; for example, you can use export funding. Export funding refers to using transaction evidence showing that you have exported products overseas, and you need money to keep running your business operations before the products reach the buyer abroad for them to pay. If your company’s operations are stalling because you lack funds, here are some tips widely discussed to help you in choosing a money lender.
1. Explore Factoring Services
As mentioned earlier, some invoices take a while to be converted into cash. So, how do you use it to secure a loan? Factoring is where you give your accounts receivable to a third party at a discount. It’s not the best method of acquiring cash, but it works perfectly for the business owner to get the money to run their business continuously. Suppose you decide to wait for the invoice to mature, your business operations will halt, which is not advisable. Besides, you started the business to grow, not stagnate.
2. Consider A Micro Lender
You can also contact a local microlender to acquire small business loans. A microlender lends a small amount of money and does not require a lot of paperwork as compared to a bank. Getting a loan from a microlender can be an ideal option because you receive the amount quickly. However, a microlender might have higher interest rates as compared to other lenders. Nonetheless, if you need the loan to run your business and at the same time make profits, go ahead and get the loan.
3. SBA Loans
SBA (Small Business Administration) offers loans for small businesses. So, if you want a loan from SBA, you must qualify to be termed a small business. If you are eligible for SBA loans, you are advised to apply for the loan from financial lenders that process SBA loans.
4. Export Funding
Most of the time, you need to offer services and goods before you are paid. However, if you have a new customer overseas, it is advisable to get the money before you send the products. Export funding might require the buyer to send a part of or the full amount for the products.
A business owner can use this form of money acquisition to ensure that their business keeps running even before receiving the full account receivable.
A business owner has to ensure that their business is growing by finding the best working capital funding strategies. It is also important to ensure that the funding strategies are working for your benefits and not entirely benefiting the lending company. For this, choose a lending company offering loans with low interest rates.