As small business owners know, funding is a necessary element to starting a business, capitalizing on growth opportunities and even helping an existing business run smoothly. Funding can come in the form of loans from investors, banks and smaller financing companies. While traditional bank loans tend to require long lead times and extensive documentation, there are also financial companies out there offering quicker turnaround and approval times if faster funding is needed. Here are a few things to consider before deciding what type of loan to get:
1. Identify Exactly Why You Need the Loan
Lenders will always ask how you intend to use the money once you have it, which ultimately helps them determine whether or not to approve your application. It’s always helpful to create a detailed plan to make the approval process go as smoothly as possible. The plan should include the amount of money you are seeking, the ways in which your business will use the money, how you intend to repay the loan and your backup plan if you are unable to repay in a timely manner.
2. Identify Exactly What Type of Funding You Need
If you need immediate cash flow, a short-term loan, such as a factoring line or reverse factoring line, could be the way to go. Factoring allows businesses to get payment on their outstanding invoices (accounts receivable) without the typical 30-60-day wait time for payment from vendors. Reverse factoring, or supply chain financing, allows a supplier to sell its invoices to a bank at a discount so that the supplier receives cash flow before the buyer pays the bill. In this scenario, the financial company deals directly with the buyer to obtain payment so the business owner can focus on running his or her business.
There are also long-term loans from traditional banks that can help businesses who don’t need the cash right away. The application process is more lengthy than that of a short-term loan and the process tends to be much slower. Longer-term loans can also be obtained online, however, where the process is often much quicker.
3. Make Sure Your Personal Credit Score Is in Good Shape
Even when you apply for a loan for your business, your personal credit score still matters because often young companies don’t yet have well-established credit. Keeping tabs on your own credit to ensure it is as healthy as possible will help you secure a better loan faster.
4. Make Sure You Throughly Research Which Financial Institution Will Best Suit Your Needs
Companies, such as ExpoCredit, are appealing to small business owners because they offer faster funding without the typical wait times associated with traditional lenders. In fact, ExpoCredit has a full menu of fast funding services to provide your business with the types of cash flow it needs, so you can focus on running your company without financial worry.
For more information and to apply online, visit ExpoCredit at https://www.expocredit.com