Start 2020 off on the right foot by setting your business up to thrive long into the new decade. As we start to reflect on the year past and envision what’s to come, we tend to bounce a few new business ideas around, some can be crazy but others can drastically improve and grow company operations. Identifying great opportunities is only the first step business growth, coming up with the finance to turn your words into actions is another matter, luckily, there are a few options available to choose from.
Business loans are the most common finance option for companies and allow you to borrow a lump sum. They offer a more flexible, basic option with many types to choose from that cater to your specific needs. Your financial advisor can sit down with you and discuss the best option for your current situation and the future of your business.
Merchant cash advance
If you’re a business that receives the majority of their revenue through credit card and EFTPOS payments, you can use a merchant cash advance as a short- term financing tool.
A merchant cash advance is a lump payment that a lender provides a business. It allows businesses to borrow money based on their account sales.
How does it work? The lender advances you a sum of money which you repay with a percentage of your future merchant sales (credit card and EFTPOS sales). The loan is then paid off over time while the lender takes an agreed percentage of the business transactions. This option is an alternative to a traditional business loan because it matches a businesses cash flow. You will pay the loan back quicker when business is booming and slower when trade slows down.
Invoices are sometimes paid late, unfortunately, that’s just part of business. If this is the case, your business operations don’t have to suffer. Through invoice finance, you’re able to receive a percentage of the invoice amount upfront from a lender. You’ll then get the remaining portion of the funds once the invoice comes through, minus the fee or charge.
When can invoice finance work for you?
Invoice finance can be the beneficial option in a range of circumstances including; if a customer places an order and you need to buy more stock, when cash flow is low and you can’t pay your suppliers, when cash flow inhibits your ability to pay staff wages or super on time or simply when your business is growing faster than you expected and you need extra funding on your side.
Equipment loans are exactly what the name suggests- a loan that’s purpose is for purchasing equipment for your business such as; vehicles, technology and machinery. An equipment finance loan is usually secured against the asset that you purchased with it. This is beneficial because you’re not required to put up security of your own, but if you don’t meet repayment deadlines the equipment could be repossessed.
Line of credit or Overdraft
A line of credit is a pre-set amount of money that a bank or credit union agrees to lend you, giving you access to cash flow on-demand at an ongoing basis. You can draw from this line of credit when you need it, up to the maximum agreed amount and you’ll only have to pay interest on the funds you actually draw out. This option gives you more flexibility in comparison to a fixed-term loan, as you can dip into it over an extended period of time.
Here at SFE loans, we know you want what’s best for your business and we do too! This article is not classified as financial advice, if you are considering any of these business finance options you should speak directly to your financial advisor. Alternatively, if you are looking for a no-nonsense lending professional get in contact with us at SFE loans. Let us empower you to understand and command your financial future.