Businesses need cash to operate. Whether yours is a new or an existing business, you rely on a healthy cash flow to keep your business performing the way it should. Unfortunately, the cash is not always flowing the way it should. For those times you will need to know where you can find loans for small business.
The economy has a big impact on the financial health of any business. Sales might be booming, and the money is pouring into your business, then the economy turns, and that income can dry up very quickly. No income means a reduced cash flow. Over time, that reduced cash flow could drain any cash reserves the business may have built up. When that happens, it is necessary to find another source of temporary cash to get your business through.
For established businesses with a good credit history, obtaining a loan for small business is not typically that difficult. Chances are you already have established a relationship with a bank, and that will make it easier to get your loan. If you do not already have a relationship with a bank, it may take a little more effort to get your loan, but if your business is established, and your credit is good, most bankers will be willing to work with you.
If your business has not been in existence for very long, or if you have run into financial difficulties in the past, it may be a bit more difficult to get one of the loans for small business that are available. Rather than going through conventional channels, you may have to speak to a lender that specializes in unsecured loans.
These lenders will usually base the loan on existing credit card transactions. When you apply for the loan you will be required to show credit card transaction records for the previous three to six months. Once the credit is approved you will repay the loan by turning over a percentage of your credit card sales to the lender until the full amount of the loan is repaid.
There are two types of loans that are typically available to small businesses: lump sum loans, and line of credit loans. Lump sum loans are just what the name implies. When the loan is approved the total amount of the loan is transferred into your account in a lump sum. Interest begins accruing on the entire amount of the loan once the transfer occurs.
The second option that is available is to establish a line of credit. With this option an account is established, similar to a checking account. An agreed upon amount of money will be available to your business, and you can withdraw the money from the account as needed. This is a great option for businesses that will have ongoing need for cash, but they may not know exactly how much will be needed. They can withdraw as much or as little as they need, and the remaining balance will still be available to them when they need more money. A big advantage of this option is that your business only pays interest on the amount that is outstanding, rather than the entire amount available.
Being able to obtain loans for small business is sometimes the difference between success and failure for small businesses. Keeping the cash flowing means keeping the doors open.