Some ways of financing a business
There are now more ways than ever to finance a business, such as MCA, line of credit, business loans, business credit cards and inventory financing just to name a few. There is a right time for each of these methods, and it is all about the situation that you’re in and how you manage your finances, as well as how much risk you’re willing to take.
One of the lower rate options is a bank loan. Bank loans have dramatically decreased in popularity mainly for two reasons. The first is that banks rarely issue loans to small businesses, as they won’t meet their risk portfolio. The second factor is that a bank requires strongly secured assets. This means that the bank will never lose. If you don’t pay your loan, they are going to take something of value.
So if you have great credit, your own assets which can be liquidated, and you have the time to go through the drawn out process of getting a bank loan, it is generally a good option.
In reality, most businesses will fail. The approval rate for applicants that go through this process is only about 15%
Line of Credit
There are a variety of lines of credits out there, secured and unsecured. Generally, banks will offer a secured line of credit, which again will require you to have a good credit score and assets to back this up.
An unsecured line of credit is based on your business’s performance. Once approved, this will allow you to pull out funds multiple times. The amount varies depending on what is available.
Merchant Cash Advance
These are unsecured funds. They are generally available to business with a short lead time, and are provided quickly to consumers with a much higher approval rate. This system will work on a fixed fee approach, with the customers having a daily amount they need to pay back.
Although you would expect to see a high payment with a merchant cash advance as it is based on future receivables, the main benefit is that you do not risk your personal investments or assets.
Another way to raise money is via an investor, be that an angel investor or another type of investor. The investor will hand over funds to the business based on an equity agreement. In general, unless receiving particularly large funds, this is a very costly type of funding your business, as often you give away a share of ownership. This means that you give away future profits, and also end up with a second decision maker in your business. This will ultimately take away the power from the business owner.
Invoice financing is another great option for supporting cash flow. Instead of paying upfront for your products, you can delay for a period in which you can sell on for a profit. This means you can invest the capital from the invoices now, maximizing the benefit you gain from that capital.
So there are many options out there for you to choose from. At QLC we focus on providing unsecured funds and lines of credit. All these are based on your performance. This is a good fit for businesses that do not have any assets outside the business, individuals who don’t want to give up equity, and businesses who know they are using these funds to invest and grow their business.
Each time we fund a business, it is an investment. We share the risk with you, because we want you to grow too, and we are here to help you along the way. Unlike other funding options, we take nothing, the process is simple and most people are approved within a day.
If you want to know more, please feel free to get in contact.