So what happens when you’re ready to make your next move—expand your territory, add new services, ramp up for bigger clients, hire an assistant? What if you have great ideas for making your business even better, and all that’s stopping you is a lack of access to working capital?
Ask yourself the right questions
Seeking funding doesn’t have to be complicated. The main considerations are wrapped up in the same core principles you already use to successfully run your business day-to-day.
What will business funding help with? Prioritize the top expenditures your proposed financing will fund. What’s most important for your business? What additional activities or services will help you achieve your vision, in both the near and long terms? Defining the purpose or need you’re trying to meet will help keep you on track and make it easier to manage funds and repay creditors.
What can you afford? Consider your cash flow carefully. Taking on responsible debt can help get you to the next level when you have a well-thought out plan for growth. Take into account the frequency, predictability and total cost of repayment across all sources of funding. It sounds oversimplified, but the numbers are all there. Look carefully at your budget and be realistic about projecting the rate at which your earnings will grow throughout the financing term.
What’s the tradeoff of value vs. risk? Think about the pros and cons of taking on debt, and use this to guide your decision. Revolving credit, like a credit card, for example may have a different interest rate calculation vs. a term loan. Merchant finance and invoice factoring may also be options, but you need to understand exactly how much you’ll pay over time to access these sources of funding. Does the opportunity to grow outweigh the risk and/or pain of committing yourself to servicing the debt (that is, repaying your loan)? Overall, it should.
What’s your best option? Determine your best funding access based on the options available. Research short-term loans alongside more traditional longer-term options; look into business credit cards and business lines of credit. Compare the relative advantages of each, including the time it will take to make the application and receive the funds. Look for a funding source that really understands your business which can help you get better rates and more funding. If you opt for a short-term loan, go with a lender you know and trust. QuickBooks Capital can help you get the funding you need, when you need it—no origination fees, no prepayment penalties, no paperwork to apply, and no surprises.