You need cash to run your business. At times, you might find yourself a little short on reserves. As you know, things come up. A new employee is hired. A piece of equipment is added. Rent and warehousing bills are due. Business owners sometimes need a temporary boost to sustain these operations.
A financially stable company needs a healthy amount of working capital to maintain operational efficiency. Your assets should outweigh your liabilities, but sometimes that balance shifts. If your cash on hand is low, there are flexible funding options that make the most of your assets, inventory and accounts receivable to free up the cash or credit you need.
Consider asset-based lending if you require an infrequent, but major purchase
If you are faced with a large-scale spend, but it’s not an ongoing expense, you might consider a term loan or revolving line of credit based on your assets as collateral. Asset-based lending (ABL) is affordable with flexible payment plans, and may make your upfront purchase cost less intimidating.
With ABL, your current accounts receivable, inventory and assets can be used as collateral for the loan. You don’t sell your assets; you borrow against them.
ABL is secure, as long as your assets remain stable. It is not tied to profit margins, but the liquidity value of your assets. This style of financing can be more tolerant of business downturns and fluctuations. It appeals to businesses that are unable to obtain traditional bank loans.
Consider factoring if your customers are slow to pay
You have plenty of customers, but they are slow to pay their invoices. In the meantime, you must continue to make payroll and keep business moving along. Factoring allows you to collect on invoices immediately and leave the administrative work to a trusted and reliable expert. It is a form of ABL that provides versatility for business owners.
Factoring is a cash advance on your own money. It is not a loan. There is no monthly payment. Instead, you turn your invoices over to a factor, who gives you a percentage immediately, then collects from the customer, keeps a small fee, and provides the remainder to you. Business owners often find this streamlined process beneficial because it includes administrative assistance for bookkeeping, credit protection and follow-up on receivables.
Consider leasing if you need to re-equip your office
With fast-moving technology, you may need to update your information and data systems. In times of growth, you may need to expand your operations, machinery and tooling. Equipment leasing is a beneficial option if you need the goods now, but you prefer to pay over time.
At the end of the lease, you can return the equipment and start fresh, or consider applying past payments toward the purchase of the equipment you were already using. Experts can help you determine whether a fair market value lease (FMV) or a $1 buyout lease is the better option for your circumstances.
Consider an SBA loan if you need quick approval, low interest and a low down payment
Loans issued through the U.S. Small Business Administration (SBA) have simple and flexible terms. Plus, they can be used for many business purposes: to purchase or refinance buildings, for startup or expansion, for long-term fixed assets, remodeling, equipment costs, or to access operating capital.
Government guaranteed SBA loans have low rates and fees and can usually be approved by a preferred lender within five days. They can be more flexible than traditional bank loans, are a good consideration for businesses with less-than-perfect credit, and don’t always require collateral. Some lenders start at $500 and lending may extend as high as $10 million in some cases.
Crestmark supports business owners
While you provide great service to your clients, let Crestmark provide great financing services to you. As a nontraditional direct lender, Crestmark specializes in working capital solutions for small- to medium-sized businesses.
Offering all of the choices mentioned above, Crestmark professionals can help find the best option to suit your situation.
Call us at 1-888-999-8050 to learn more.