You must organize and manage your business finances as efficiently as your operations. However, there may be instances when you will need money instantly to carry on with business operations or to fulfill big orders.
Knowing that there are financing tools that will help you carry on operations seamlessly will allow you to serve more customers while gaining their confidence. This guide will focus on three financing tools that can help you improve your business finances.
1. Small Business Checking and Savings Accounts for Your Business Finances
There are several different business checking accounts available depending on the volume of business transactions and the account owner’s ability to maintain a set minimum daily balance. For example, a basic business account may allow you to transact a combination of 200 debits, credits, and deposited items in a statement cycle. At the same time, you have to maintain a minimum daily balance of $2,500.
You can also earn interest on the money you put into a business interest checking account, business savings account, business money market account, and business certificates of deposits (CDs). For example, you can earn competitive interest rates in a business money market account and still have access to the funds when needed.
2. Traditional Financing Options
Small Business Administration (SBA) Lenders
You can apply to commercial banks that get a guaranty from the SBA to loan qualified businesses up to $5,000,000. Companies can use this money in various ways, from purchasing land to using the money for working capital. However, you must meet good credit requirements and as well as other requirements before you qualify for this loan.
Equipment Financing for Business Finances
These types of loans use the equipment you purchase as collateral for securing the loan. The types of equipment financing available are operating leases, which you can generally use for short-term equipment financing, or finance leasing.
3. Alternative Financing Options
Financing doesn’t necessarily have to come from a bank or credit union. Private lending companies offer alternative financing options, especially if you need funding fast and with flexible accessibility. In addition, they are more flexible in their requirements when offering to finance.
For example, because these establishments have lower costs, they can finance small businesses that commercial banking institutions consider too risky to qualify for bank loans. In addition, they can be flexible on requirements, such as credit scores, annual revenue, or time in business. Here are examples of options that alternative financers can offer you:
Invoice Financing will Improve Your Business Finances
This type of financing will lend money based on unpaid invoices. It’s possible to borrow up to 100 percent of the value of the invoices. However, invoice finance companies will advance you 85 percent while holding 15 percent until customers pay the invoices.
In this type of loan, you can get financing in as little as one to 10 days, but the costs can be steep if customers don’t pay the invoices promptly or don’t pay them at all. There is a 1 percent rate for every week the customer doesn’t pay the invoice and a 3 percent processing fee.
Short-term Business Loans
Alternative short-term business loans can offer you up to $250,000 for up to 24 months. However, the interest rates can range from 29.9 percent to 97.3 percent.
Financial Tools Take the Worry Out of Business Operations
Business accounts and financing will allow you to have the capital for a smoother, more efficient business operation. In addition, knowing the financing tools at your disposal will allow you to confidently serve your customers while they continue to have trust in your business.