STEP 1: SELF ASSESSMENT
STEP 2: CONQUER CASH-FLOW & FINANCIALS FIRST
- To obtain a traditional bank loan, it’s important to understand what lenders are looking for. You’ll be evaluated on business profitability, cash flow, credit history and collateral.
STEP 3: RESEARCH ALL AVAILABLE OPTIONS
- SBA loans usually have more reasonable interest rates, though the application process can be paperwork-intensive.
- For business owners in need of meeting urgent obligations, merchant cash advances offer cash up front. The lender receives a set percentage of future credit/debit card sales until the loan is repaid.
- A line of credit is a set amount, similar to a credit card. It’s mostly available to well-established businesses.
- Commercial mortgages are for businesses seeking land or buildings. Owners will pay equal monthly payments for a set number of years with the property used as collateral.
- If you’re seeking to lower finance charges, consider a debt consolidation loan to refinance current debts or secure a lower interest rate.
- Many service-based businesses turn to accounts receivable financing/factoring, where the lenders purchases the borrowers accounts receivables with cash up front.
- Crowdfunding for debt can offer 3-5 year amortization periods.
- Leasing equipment from a manufacturer or specialized lender can help you free up capital for other uses.
- In an equipment sales lease back, the lender buys equipment at a percentage of liquidation value and later “resells” equipment back to you once the loan is repaid. This is useful for businesses when the equipment is a primary asset.
STEP 4: REALITY CHECK
STEP 5: SLEEP ON IT!
- “Will this loan allow me to focus on growing my business and making it more profitable?”
- “Will I stop lying awake at night worrying about cash flow?”
- “Is the expense worth it?”
- “Will this loan address the problem that is actually causing my cash flow problems?”