For many business owners, securing finance is one of their most challenging tasks. When cash flow is tight and savings are non-existent, where can a business owner turn for financing to keep their business afloat? Financing issues can be very stressful and throw the future plans of a business into disarray. As a business owner who needs some finance, the first that you may consider are short-term bank loans, selling assets or availing of government grants, but those options are usually difficult to get your hands on and the likelihood is you may already have exhausted them.
Luckily, there are several alternative sources of finance available for business owners – sources that you may not even have been aware of let alone considered! Here are 4 great alternative sources of finance for businesses:
Supplier financing programmes (also known as supply chain financing) help business owners to have uninterrupted cash flow by providing liquidity to their suppliers and reducing the risk evident in open account sales. Through these financing programmes, companies can essentially consolidate their payment processes. Supplier financing does not constitute as a loan, it serves as merely an extension of accounts payable. The main benefit of using supply finance is that the buyer does not pay any fee to extend their payment terms. For suppliers, the core benefit is that they only have to pay a small discount if they want to get paid early.
Do you want to turn your invoices into cash flow for your business? Rather than waiting around for debtors payments to come through, you may be able to access more immediate cash flow by arranging invoice financing. Invoice Financing allows your company to raise working capital by converting current trade debts into cash flow. It is a completely confidential solution and as far as your debtors are concerned, everything works as normal. You receive up to 90% of the value of invoices from your bank or financial institution. When your debtor pays the invoice and the amount is remitted to your bank in full, the remaining balance minus bank charges is paid to you
Crowd funding is becoming a very popular source of financing for small-medium sized businesses. This funding method involves allowing normal people to become investors in your company or loan you money by financially backing your project. There are several crowd funding platforms available – Kickstarter, Indiegogo, GoFundMe, RocketHub and Razoo are among the most popular online platforms. If you have a product or service that you really believe in, you can turn to crowd funding to source funding from others who believe in your product or service too.
Business Credit Cards
There are a number of companies, outside of banks, that provide credit cards for businesses. However, only business owners with the discipline to manage this line of credit should consider it. Business owners should only consider credit cards for emergency cash flow needs, as they are only an attractive option if you can facilitate repayments within a month. Often, business credit cards offer low introductory rates that make the initial months of usage particularly attractive. However, when that introductory period is up, they can prove to be an expensive option for financing your business.
We hope this guide provides a helpful insight into alternative financing available for your business. Best of luck on your quest for financing!