If you recently opened up a small business and find yourself in need of cash to meet payroll demands or to pay your suppliers, you might not know what your options are. Banks and other traditional lenders can be reluctant to loan money to businesses without a credit history. Luckily, there are lenders who offer a variety of short term loans that may meet your financial needs.
1. Purchase Order Financing
Sometimes you find your inventory levels low and your suppliers will only ship to you once they’ve received payment. If this is the case, then purchase order finance might be the right option for you. With this type of financing, you send a purchase order to the supplier and a copy of that to the lender. The lender will pay your supplier and you bill your customer. When the customer pays you, the lender will take a percentage of this as a fee. You will continue to pay the fees until the loan is repaid. Lenders will want to see that you have a lot of orders when deciding whether to lend or not.
2. Merchant Cash Advance
Businesses that do a lot of debit or credit card sales could be good candidates for merchant cash advances. This is a loan against future sales. The lender has access to your credit services or business bank accounts and takes fees from the accounts to repay the loans. A merchant cash advance can be a few thousand dollars to ten times that or more. Lending requirements are not too stringent and you can expect to get the money into your account fast.
3. Asset-Based Loans
If your business has a lot of assets but not much working capital, an asset-based loan might be appropriate for you. With this type of loan, your assets are used as collateral to get a loan. The more assets your business has, the bigger the loan you will qualify for. Assets can include equipment, inventory, real estate and accounts receivables. These loans are very flexible with how the money is spent. You won’t need to worry about approval from the lender for its use.
Do your research on the types of loans that are available and determine which is the best for your business. Pay attention to interest rates and make sure that you will be able to pay off the loan without any penalties. Any of these short term loans will help your business get the money it needs to grow and satisfy your customers.