4 Ways to Raise Cash for Your Business Fastsubmitted on 31 March 2018
There are many pros to having your own business, but unpredictability is also something that every business owner must deal with in varying degrees. There’s no guarantee that things will always be as smooth as they are today and a good businessman not only knows this fact, he prepares for it too. However, there are times when you just don’t have the right amount of cash to do what you need to do, and that’s exactly where the following five ways to raise fast cash can help.
Quick Online Microloans
Perhaps the easiest and fastest way to raise some immediate cash is for you to take an online microloan. Bonsai Finance can transfer the money you need in less than 15-minutes after they approve the application and the approval process is instantaneous. One point to keep in mind is that while there are no hidden charges with Bonsai Finance and the fee structure is quite simple, you will likely get a lower annual percentage rate with longer terms on the loan. As microloans are usually small loans, they alone may not be enough to help you out of a particularly demanding financial crunch, but when it comes to getting you out of a fix with some immediate cash that you don’t have available right now, these superfast loans can be extremely useful. However, they are short-term loans, so you will need to pay the principal plus interest/fee back to the lender within just a few weeks.
Short-Term Business Loans
To handle bigger financial needs, you could opt for a short-term business loan, as long as you are sure that you would be able to pay it back with interest within the stipulated short period. The term generally varies in between three and 18 months, but it can be longer or shorter, depending on the lending company. The allotted money would be transferred to your intended bank account in just 24 – 48 hours if the loan is approved. Both the approval of the loan and the amount that will finally be allotted to you depends largely on your company’s financial standings and credit history. While they are fast and can often be quite helpful in times of need, the biggest disadvantage that short-term business loans have is that they charge huge interest rates that are similar to what the credit card companies charge.
Invoice Factoring
This is only applicable to the two following stipulations: 1) If you are a B2B establishment, and 2) If your primary concern involves unpaid invoices. How this works is that the invoice financing company will pay you a cash amount that’s equivalent to anything between 50% - 90% of the total due amount billed in the unpaid invoices you have at the moment. As you receive the payments from your customers, you will have to pay them back, in addition to the fee of course. Now, this is one of the more expensive options and you should consider the following details before taking it.
• The fees are generally higher than most other types of loans
• This is more like a continuing monthly/annual service and canceling fees will likely be applicable
• There’s generally an additional factor rate of 3%/week, so weekly payments are a must
Merchant Cash Advance
Merchant cash advances are actually not that different from invoice factoring, but the scopes are much greater and even B2C customers can avail the opportunity to get a hold of some immediate cash. Instead of just invoices, the MCA companies allow the borrowing company to sell a portion of its projected revenues as well. As with many such deals, MCAs can get pretty expensive. There’s the factor rate to consider and the payments will not only be deducted from your income on a daily basis, they may rise (and fall) depending on how much money the business is generating.
Business Term Loans
If you need the fast cash to make some business expansions or buy costly equipment that would help you generate greater profits in the long-term, you should be looking at old-fashioned term loans because they offer the highest amount of money when compared to any other type of loan. Term loan applications generally do not take as long as they used to, and the funds can appear in your account in 48 hours or less, but only after approval has been granted. However, getting a business term loan will require a good credit history, and for getting approved for a particularly big loan, your company’s financial standings will have to be good enough to support it.
You will need all the supporting documents as specified by the lender and the approval process itself can take time. Banks and credit unions are generally the financial institutions to provide such loans for a term that may range anywhere from a year to five years. Interest rates on term loans are calculated on an annual basis, but the exact rate differs a lot, depending on the lender, the amount of money borrowed, the term, and other particulars. Nevertheless, the rate of interest can go as high as 30% in some cases.
Be wary of variable interest rates before signing up for a term business loan because changes in the market can shoot up your payments a lot higher than expected if the lender is applying a variable interest rate on your loan amount.
It is important to understand that every form of fast cash also comes with its own set of terms and conditions which, in some cases, could end up being very tough for you to pay back if you bite off more than you can chew. This is why it’s important to weigh the pros and cons of every option on this list first and then to scale them against your own abilities and requirements before taking a decision. Loans are an inevitable part of running a business, but too many of them can ruin any businessman, especially when taken without fully understanding the implications.
|
