If a loan falls through or an investor drops out, how would you keep your business running? Without capital, not only will it be hard to fill orders, but also it will hard to ship orders too – not to mention all the operational costs, paying employees and the hundreds of other miscellaneous costs. If your source of financing dropped off, it would be a nightmare, right? Yet, there are a number of alternative methods to financing your business that you might have not even thought about, which are completely viable options. Instead of throwing in the towel, raising the white flag, and putting a for sale sign on your business, it is time to get creative. Here are 5 alternative options for financing your business.
- Home equity. If you are really in a bind with your business, you can always take out a line of credit against any equity you might have in your home or any other property. It will not be smart if you don’t have guarantees to repay the loans. However, if you already have an established business, taking out a line of credit is an excellent option for financing, especially if an investor drops out or if a loan falls through.
- Credit cards. If your business has excellent credit, or if you have great credit, you can always sign up for a company credit card. If you have receivables ready to produce and ship, you will usually have a better time getting a bigger ceiling when it comes to your monthly maximum, but first time applicants will usually have somewhere around $10,000 to start. The more you can show that you can pay your bills at the end of the month, the bigger your credit maximum.
- Line of credit with manufacturer. One of the best ways to get financing for your business is to get a line of credit with your manufacturer or wholesaler. In general, depending on how great your credit is, you can get between a net 30 to net 60 line of credit, which means that you don’t have to pay your bills for up to 60 days. Plenty of time to produce the order, ship it, and get paid for it – part of the money, of course, goes to the wholesaler or manufacturer.
- Look for a factor. A factor is a unique way to get quick financing for your business, especially if you are in a bind. A factor will give a company a loan based purely on proof of receivables. For instance, if your company has an order for X amount of dollars, a factor will give you the money you need to produce and ship the order. Also,Pay4Freight a freight factoring company will even give you the money you need to ship your product.
- Savings. Have money saved up? If you need it for your business, it might be worth it to become an investor in your own business. You might even have a life insurance policy or a mutual fund you can dip into. You might even make more money back on your savings, as opposed to just leaving it in the bank to accrue a measly interest rate.