Your small business is at a disadvantage when it comes to getting the money that it needs to operate. This is because banks and other traditional lenders don’t want to loan to smaller companies that don’t have a track record or make a lot of money. What should you know about small business financing if you need extra capital to keep your business afloat?
Use Your Credit Card Receipts As Collateral
If your company allows customers to pay by credit card, there is a good chance that you can use those receipts as collateral. You can take a loan from one or more of your merchant accounts and pay the money back slowly over time. The loan terms are flexible and there may be no interest payments required for several months. If you think that you will want a merchant cash advance, contact your credit card processing company ahead of time to make sure your company offers such a loan.
Fund Your Business Through Your 401k Account
Did you know that you could use your 401k to fund your business? The process to do so is fairly simple. What you do is take money from your retirement account to buy shares in your company. There are no fees or penalties associated with this type of maneuver. The IRS considers it to be a type of rollover that any small business owner can use to their advantage.
Your Land Could Be A Source Of Business Capital
You don’t need to rely on merchant accounts or credit card processing profits to secure a business loan. Business owners can use their building or lands as collateral for a bridge loan. The bridge lender puts a lien on your property until the loan is repaid. Interest rates for such a loan are usually lower than other types of alternate funding available.
Don’t Let Your Credit Score Hold You Back
Your credit score shouldn’t prevent you from getting the loan that you need to hire new employees or buy a new machine to expand production capacity. Many alternate financing companies don’t care about your credit score. They are more interested in the health of your business. If you are making money, you should have no problem getting a loan.
There are many ways that your company can get financing. If you or your company has bad credit or no credit, using your assets as collateral can keep your company alive for the long haul.