Fast Cash for Small Business
Running a small business can be a nerve-wracking experience, and whether you’re experiencing a cash crunch because times are tough, or times are too good for your own good, there are a couple of ways to get cash quickly and meet your business needs.
Purchase Order Financing
If you’re a business that sells tangible items, purchase order financing may be an option. Like the next option, PO financing is really helpful when you’ve discovered a product for which there is high demand. You may have a lot of orders, but after the initial run, you don’t have the capital to refill your inventory and fill your orders. A purchase order financer will loan you the money based on the creditworthiness of your customers who placed the purchase orders, which is great for new businesses or those who have less than stellar credit. One thing to keep in mind is that your lender will place restrictions on your use of the funds, meaning they must be used to fulfill the purchase order, not to meet payroll or other business expenses. In fact, the loan generally goes directly to your supplier, not to you.
Invoice Financing
In invoice financing, you can provide either goods or services, and you’ve already delivered the goods. Instead of waiting up to 90 days to receive payment, you can group those invoices and apply for invoice financing. In this case, the lender is loaning the money directly to you against the money you are owed. Your customers will pay the lending company to close the invoices as if the lender bought your accounts receivable. Like purchase order financing, it is not your credit that is important, but the credit of your customers. Also like PO financing, there’s not a lot of paperwork and you can get the money quickly. Unlike the first type of loan, however, your business receives the money directly and you can put it towards whatever business expenses you need it to cover.
Remember that in both cases, your costs for these short-term loans will likely be higher than for a traditional business loan. Unlike a small business loan, you don’t have to have established credit, and the principal pays itself based on work you have already contracted or provided, meaning you don’t have to worry about making a lot of future payments when you don’t know what the market will look like. If you need money quickly as your business is taking off, consider one of these options to catapult your business to the next level.
