Ways To Access Financing For Your Small Business

The success and development of a business often depends on taking risks to capitalize on opportunities at the right time.  Many times these opportunities require capital that the business may or may not have.  Here are some ways to acquire a small business loan and take your business to the next level.  

Friends and Family Loans

The first place people turn to are their friends and family. And why not? It doesn't matter what your credit score is, the underwriting process is just a short conversation and boom, you're funded! Usually these loans will have little to no interest with extremely flexible payment options. Everything about a loan from a friend or family member is great except for the risk a default. In the event of a default your relationships will be jeopardized and in extreme cases, even severed.  

Bank Loans

Typically reserved for small businesses with stellar credit, pristine financials, and steady profit; bank loans are the cheapest form of financing outside of friends and family.  Getting approved however is extremely tough given the tough underwriting process each application goes through.  

SBA Loans

SBA loans are a way for small businesses to secure capital if they have trouble qualifying for a traditional bank loan.  They alleviate the banks' concerns for default by guaranteeing a portion of the loan thus reducing risk.  Usually SBA loans require a laundry list of documentation but Fluid has figured out a way to simplify it.

Equipment Leasing

This type of loan is provided by a small number of specialized banks that is suitable for companies that have decided to invest in the modernization of their business or those that are in need of specialized equipment to run their daily operations. There are many variations to the lease terms such as the dollar buyout lease or the fair market value (FMV) lease.  Essentially all leases have a term length and a monthly payment that gives small business owners the financing to purchase equipment.  The minimum down payment ranges from 0 to 20%, and the leasing period can range from 24 to 72 months.

Receivables Factoring

This type of financing is based off of the business's accounts receivables.  For a small fee, the business can immediately access capital that is tied up in future payments.  This can be extremely useful when trying to improve cash flow.  

Alternative Financing

Speaking of improving cash flow, alternative financing via the form of merchant cash advances or  micro-loans can help alleviate a business by injecting sums of cash during slower times.  These types of financing are typically more expensive but they have a much faster turn around time and a more lenient underwriting process.  The business owner's credit will impact the rate however they will rarely be turned down.  Alternative financing is a great way to quickly access capital in the short term to take advantage of time sensitive investment projects.