Best Ways to Get Working Capital
When you manage a business, you’re likely always looking for new ways to help fund your business operations so you can continue to grow and expand. However, not every business has the same financing needs so it only makes sense that the traditional methods for funding your business wouldn’t work. In fact, there are several different ways that businesses can get working capital to fund their operations that don’t include simply going to your bank and taking out a loan. Before you go the traditional route and apply for bank loan, you should look into an consider these alternative funding sources for your business.
Crowdfunding isn’t just used as a means for raising money to help out those in need or for nonprofits. These days, many businesses are turning to crowdfunding to gain working capital for their operations. With crowdfunding, you get a chance to tell your business’s story and get buy-in from an audience interested in getting in on the ground level of a project. You provide them with a target and explain your need and then let them donate what they think is suitable, often in exchange for a small token as a way of expressing your gratitude. You won’t have to worry about paying back a loan with interest and you’ll have you money immediately.
With peer-to-peer lending, you get the working capital your business needs right from your peers while cutting out the banks and typical terms associated with a traditional loan. Instead, you work on an online platform that offers lower upfront rates and fees which can save you money in exchange for a small percentage.
Small Business Administration Loans
Small Business Administration (SBA) loans are offered through the Small Business Administration with a guarantee. This can help mitigate the risk for banks who may not typically be willing to take on the risk of giving your business a loan. While SBA loans are helpful for small business owners, the loan process is a bit more tedious so don’t apply if you need the money right away.
Factoring is a type of invoice financing that gives you cash up front in exchange for selling your invoices to a factoring company. This allows you to have immediate access to the working capital your business needs without taking on the burden associated with a traditional loan. In exchange, the company collects a small fee from your customers when they pay their invoices in full.
Not every financing strategy is right for every business, so you should discuss the different options available with a trusted financial professional to see which is right for you.