Small businesses often use financing to fund growth, manage cash flow and secure expensive equipment. If you are hesitant to take on debt, you may think you are responsible financially, but you could be hindering your business. Here are five signs that your business might need funding:
- You are out of cash. While each business is different, it is recommended that you have at least 90 days’ worth in your bank account. You may need to look for financing if you need more cash in your bank account to last three months.
- Your business uses a lot of credit. If your company uses a large portion of the total credit available, it can hurt your credit rating and your chances of getting a larger loan when needed. Plan to get the right financing for your business.
- You can’t meet demand with your tools, technology, or space. It’s precisely this kind of expenditure that loans are designed for. They can pay off handsomely through increased output and the ability to serve and acquire more customers.
- The competition is fierce. Refrain from overreacting if you are dealing with a new or successful competitor. But, it will be necessary to act. You could expand your product range, stay open longer or hire more staff to provide quick service. You may need to obtain financing for any of these actions.
- You need more capacity. You may have received a large order and need to hire temporary staff to meet deadlines. You may need more bagels daily and hire a new baker to meet the demand. The addition of capacity is one good reason to borrow money.
If you decide it’s the right time to get a loan or any other type of financing, you have many options. The traditional bank loan will likely be the most affordable way to raise extra money, but reaching your account may take some time.
You can find marketplace lenders that offer online applications to get cash in a few days. However, you will pay a high price for this convenience. Clover Capital may be another option for Clover customers. This program will advance your cash based on the average sales of your credit cards. The repayment is simple and based on your sales. You will only be stuck with payments that you can afford.
It can indicate that your company is ready to grow and vigorously. Just as with a personal credit card, you can use financing to improve your credit score for your business and achieve your goals. Be thoughtful when choosing the type of financing, the amount, and the timing. Many options can meet your needs.