Being a small business owner, you will know that there are different phases and stages in the life cycle of a business. Sometimes it’s smooth sailing, whilst other times there are rough seas to navigate.
You work hard and devote most of your time to the business, but sometimes forces beyond your control can result in a challenging environment. Issues including rising supplier pricing, changing customer preferences and downturns in the economy can put your business under pressure and lead to cash flow problems. At these times, you may need to access financial help to get you through the storm. There are several options that struggling businesses can turn to, so here’s our guide to how to access the money you need when pressures are mounting:
Where Struggling Businesses Should Not Go For Help
If your business is struggling, then in a few minutes you’ll learn how to get the needed financial help. However, it’s also crucial for you to also learn about where you shouldn’t go for help.
- Banks and Credit Unions
Struggling businesses should not expect a warm welcome from banks or credit unions. Instead, you need to be prepared to receive a cold shoulder. This is because banks, as well as credit unions, are often reluctant to approve loans for struggling, small businesses. Small businesses often struggle to have funding applications approved even when times are not challenging.
- Peer-to-Peer Lending
Peer-to-peer lending refers to a type of lending in which investors loan funds to a business via an online platform. This idea is such that both lenders and borrowers can gain access to a better rate than is offered by banks. But when you are a struggling small business, it is extremely unlikely that a peer-to-peer lending platform will provide you with finance, and particularly not at their normal favourable rates, therefore save your time and energies and go straight to the solutions that are far more likely to really be of help.
Here’s Where You Should Seek Help for Your Struggling Business
There are two significant types of crowdfunding, namely, equity and debt. In equity crowdfunding, organisations tend to finance start-ups. Therefore, smaller amounts of money are involved. The investor will earn some share of the business and will benefit when the business benefits. When it comes to debt crowdfunding, investors tend to lend funds to more established businesses. They can, in turn, receive more interest. Besides the financial incentives, some crowdfunded enterprises can receive support and guidance which is an added bonus.
- Asset Refinance
If you’ve paid a substantial portion of your HP agreements, you may use the asset’s equity to access some funding. In these circumstances, the refinance company will pay the balance of the hire-purchase agreement that is owed. You can then take charge of the asset. You can also borrow up to 60 percent of the overall value of the item. As in the case of invoice based financing, this may be a quick way of a business accessing money.
- Unsecured Loans
Unlike most business loans that are secured by collateral, unsecured business loans go through approval based on credit rating as well as financial history. If the business is struggling because of poor credit, or limited financial history, you need to consider a business cash advance as the best alternative to a business loan that’s not secured. In contrast to well-established companies that may have equity in their assets, small businesses that have few assets and no property will have to rely on unsecured loan options.
- Business Cash Advances
A significant number of merchant account companies, as well as providers of digital payment solutions, give advances against credit sales receipts. Conventionally referred to as merchant cash advance, this mode of funding had a reputation for being expensive. However, today’s programs provide attractive terms. There may also be hybrid programs that can go under various names including ‘working capital loan’. The business is given the money, and then the owner can repay it from a particular portion of future sales.
- Credit from Vendors
Vendors could be willing to provide extended repayment terms, particularly to good customers. Some individuals even have personal financing programs known as pay-on-scan programs. Through these initiatives, one can pay retailers for products supplied only when the inventory has been sold.
If your business is struggling, don’t struggle alone. Seek help as soon as possible and access some of the many solutions that are out there.