So you’ve decided that having your own business and being the top dog pulling all the strings is the way you want to proceed with your life. Good for you! The decision to start a business isn’t always one people can go through with no matter how well they’ve developed their plans and ideas. It simply isn’t for everyone.
Now that you have your business up and running though, you’ve noticed that it isn’t always unlimited vacation days and stress free living being the boss. You have to maintain all aspects of your business on a consistent basis and always be prepared for what lay ahead. Some months are slower than others, meaning that money can get very tight very quickly. Keeping your business afloat through these times can be a challenge, but there are options if your usual methods aren’t panning out for you this time around.
Here are just some of such options:
Taking out a small business loan
It might be necessary that you take out a loan from the bank to keep everything going smoothly for a period of time. Ideally the loan you take out has low monthly payments and a low interest rate so you can pay it off quickly and get over the hump you’re in for good. The monthly payment will be another expense you have to worry about each month, so carefully consider just how much you’re getting in your loan and don’t go overboard just to have some emergency cash you might not end up even using. With the way interest rates work, you might end up paying all of that extra money you didn’t need back to the back through interest. How much you get from the bank or a lender is typically tied to your personal or business credit score.
A business cash advance
Many different lenders offer what is known as a merchant cash advance. This is different from a small business loan. It’s a lump sum payment given with the understanding that the income of your business will be able to pay back the money. The money to pay back these kinds of cash advances is typically taken from your daily credit card receipts. How much a lender is willing to give you is directly tied to how much money you make via credit card sales each month.
Essentially, the lender is willing to do this because without this money your business would go under, but it’s otherwise still profitable enough that if they put enough in to keep it going you they’ll see that money come back to them, with a little extra for themselves. Instead of being tied to your credit rating, a merchant cash advance is tied instead to how consistent your credit card sales are from month to month. If you consistently bring in ten thousand dollars a month through credit card sales and have been for some time now, that’s all you need for a lender to be willing to give you a business cash advance.
Sustaining your business requires a lot of effort from you physically, mentally, and of course financially. A business is all about money at the end of the day and it’s important that your profits always exceed your expenses. Sometimes this isn’t always possible, and is actually a normal part of running just about any business. If these times where you’re running in the red are impacting your businesses’ ability to continue to exist however, it might be necessary to seek outside funding.