Irrespective of their size and nature most businesses face financial crunch sometime or the other in its lifecycle. These crisis situations become all the more important for small businesses because the banks and financial organizations are often ready to lend money to big business houses but not to the smaller ones. Besides, small businesses with their limited capabilities often find it overburdening to repay a bank loan.
Small business owners have been trying various options and various types of loans to see which suits their needs better, however, a point that is often missed out by them is that they can probably manage these situations often without any outside help. Sounds surprising? But its true, and here are some of the ways you can do it.
- Try to Base Your Business at Home: This is not possible for all but if you can have a home-based business you can actually save a fortune. You save on expensive commercial rent, which is a recurring expense. As you are based out of your home, you don’t need to commute, so you save on transportation. In addition, your business use of home expenses would qualify for income tax deduction. So just one-step and you have three fold savings.
- Credit Cards: If you are a business that doesn’t accept credit cards, you are actually saying NO to a big segment of your prospective customers. People hate to see cash going out of their pocket and that is why they love credit cards. Accept credit cards, your sale is bound to increase. Not just that, you might be offering credit to your customers and if so, you must have faced the hardship of collecting your receivables and bad debts are just a part of this game. With credit cards your customers can pay easily and you don’t have to think about bad debts. What more, if you have a steady flow of credit card sales, you can qualify for a business cash advance against your future credit card sales receipts. These business cash advances do not have any fixed repayment schedule and are paid off from your credit card sales receipts.
- Don’t Block Your Money in Inventory: Businesses often have a large part of their capital blocked in inventory, not just that if you are maintaining your inventory, you need to store them somewhere; so there is a cost for warehousing / stocking them as well. Avoid this process and try drop shipping. When you make a sale contact, the manufacturer who would ship the product to the customer under your invoice and shipping label. You save on your shipping and warehousing cost and also more money available for other operations.
- Get Your Customer’s to Pay Upfront: Offer special discounts, subscriptions, coupons, gift certificates to customers who pay upfront or customers who purchase for a pre determined amount within a stipulated period. Your sales will increase and people would be more inclined to pay in cash – result: You have more cash at your disposal. Obtaining advance and retainer fees can also be a good way to accumulate cash from your customers.
- Debtors and Creditors: If you can manage your debtors and creditors properly that would probably solve more than 50% of your fund crunches. Try to get extended credit periods and higher credit limits from your creditors. The longer your credit period, the better it is for you. Maintain a strict credit line and systematic collection procedure. You should be able to get more cash from your debtors and hold more cash from your creditors resulting in increased availability of cash and better cash flow.
In addition to the above-mentioned points, there are numerous other ways that can help you to get more cash without having to opt for business loan. Control your costs in every possible way, try to avoid buying expensive equipments and use them on rent or lease, participate in charities to generate free publicity; these are just some options and there must be hundreds of other options that would help you to run and grow your business without opting for an expensive business loan.
This article is written by Ray Smith, a marketing expert with years of experience in different industries and specialized knowledge on SEO and Internet marketing. Business Cash Advance
Business Loans FAQ:
Question: Are there any ways beside taking a loan out to get money to improve my business, so that profits will enlarge?
Answer: I think basically you have two options. First, you can find someone who will agree to give your business some money in exchange of a share of your business. I think this is the best way, certainly you will have to give away a part of your business but you will get cash to develop it! Second, you may have a look around and apply for a business grant. There are many of them currently available, so why not to give it a try?
Question: I am 22 & looking to start a new community beneficial business in the UK. What grants (not loans) can I go for?
Answer: If you are unemployed and register your new business with the job centre there are financial benefits (including grants ), which ‘may’ include £500 towards costs for your new business. Obviously you have to give them a robust Business Plan and show them evidence that you are operating. If you start your business under ‘New deal’ there are other financial grants available. Ask to see a business advisor at your local job centre.
Question: Why do small business still have trouble getting loans?
Why when interest rates are low and the federal government allocated money to help struggling banks, do we still hear stories that small businesses are having trouble getting loans?
Answer: As with most people, small businesses apply for a loan when they need it and from a bank’s perspective, the best time to give a loan is when someone doesn’t need it. Also, banks view small business as “high risk” and in this economy, banks are going to be ultra conservative (think securitized loans).
Question: Business Loans For Poor Credit?
I’m looking for a low interest business loan to start a company. I need around 90,000 to start. This will buy the truck, help hire another driver and a dispatcher and help with operating cost. I have poor credit and am living on 654.00 a month minus 300 for rent and 120 utilities and 50 for phone. can anyone tell me where I can get a loan with poor credit? I cannot pay any upfront fees.
Answer: Sorry but you will not get a loan without a co-signer.
Question: Does Anyone know Where I Can Get Loan Help Info?
I don’t have the best of credit but I have a co-signer and my own business. (That’s what the loan will be used for) but all I get online is payday lenders and I can’t find a serious lender. Any ideas?
Answer: I would advise that you contact your local financial institution and they should be able to help you with the matter at hand.
Question: I would like to start a business out of my home?
I don’t have any real capital to work with at this point so I can’t even consider something big. I don’t want a loan at this point because I am not sure that it would even do very well. Is it legal for me to start off under the table, or how much profit am I allowed to make before I have to file taxes on it? The business would be making alterations, baby clothes and maternity.
Answer: The good news is that you only have to report the income from self-employment with your regular taxes (until you start making enough to hit quarterly reporting). That means that although you have to report all your revenue, it is offset by your business expenses. The key is to get the appropriate business license and tax ID numbers for your jurisdiction, keep good records, and file your taxes on time. You can start off as a sole proprietor (no cost) and later incorporate if the business takes off.
Question: Has anyone used “Recession Loan Firm”? Are they a legitimate business?
Answer: If they ask for ANY CASH upfront, they are scam and you should scram.
Question: Is it possible to find a $20K-$30K loan 48 month term for a Pool Route business?
I have small business experience and have been servicing residential pools, spas, fountains and equipment for over 1 year. I have equipment, a reliable truck, supplies and access to supplies. I also used to be a buyer. I don’t have the financial ability to buy an established route. I have little to no equity in my house, very little in savings and a slightly above average credit score.
Answer: I would suggest looking for someone who wants to sell their business and might be willing to carry financing for you. You would have to sell yourself and probably agree to a higher purchase price, but if you can get into the business with $5-$10k, vs $20-30k, it would be worth it.