If your business is moving through a tough time, cash flow can be a huge struggle. Even when sales are picking up and you’ve averted a real crisis, not being able to pay vendors or staff will stop your operations in their tracks. You may not think that you are lendable when your business is struggling, but there are options available to you. Here are seven creative financing options you might consider.
1. Vendor Financing
If most of your payables are to just one or two major suppliers, they have a vested interest in helping you over this hump. Call your sales rep and let them know what’s going on. If you have a good history with them, your vendors would rather extend their payment terms or even accept installments on a past due balance than lose a customer to bankruptcy.
2. Accounts Receivable
Sometimes a cash crunch occurs because of slow payments from customers, or because a company has landed a big sale and incurred all the expense of delivering but won’t be able to collect from the client right away. If this is your situation, you can borrow against those receivables from your lender or sell them outright to a factoring company.
Whether your business is thriving and you can’t keep up, or you are waiting on clients to pay their invoices, Universal Funding can help your growing company. Call us at 855.214.1390 or complete our rate form today to learn more about invoice factoring and how it can improve your company’s cash flow.
3. Borrow Against a Contract
If you’ve recently signed a big customer or two but don’t have the resources to deliver your end of the deal, take those contracts to your bank. Lenders are accustomed to seeing this kind of cash flow issue in a growing company and they are often able to help.
4. Alternative Lenders
If your bank turns you down for a loan, there are other places you can turn. Peer-to-peer lenders like The Lending Club or Funding Circle are a good option for some businesses. If you haven’t tried your friendly neighborhood credit union, you may find them more receptive than a large bank.
Sites like Kickstarter and IndieGoGo are useful for raising cash, especially if you can tie the campaign to a creative project launch. You’ll need a great story, fun visuals (preferably a video) and something interesting to offer your supporters in exchange for their support to make this work.
6. Secure a Loan
If your business has equity in a building or owns valuable equipment, you might be able to obtain a secured loan. Or, if you’re willing to take on personal debt to fund the business, consider a home equity loan, a margin loan against your investments, or borrowing against a whole life policy.
7. Sell Off Equipment
If you have equipment that is fully paid for and ready for an upgrade, you may be able to sell it for cash and get seller financing to replace it. You’ll be spending money in the long run, but you’ll get an immediate influx of cash right away. Use this option sparingly, and only for upgrades that serve your business in the long run.
Cash flow is a tricky beast. It’s possible to find your business in a serious cash crisis even if your business model is solid and profitable. But there are many ways to inject a little extra cash into your operation and avoid the “cash flow heart attack” that business owners fear.
About Universal Funding
Universal Funding is a private funding source that has funded thousands of businesses and more than $2 billion since 1998. We turn your accounts receivable into the funding you need through invoice factoring and can have capital in your hands in a matter of days.