According to a recent study performed by the US Bank, almost 80% of small businesses fail because of inappropriate cash flow management. In case a small business doesn’t have enough amount of capital to support its daily operations, business endurance will standstill. Alternatively, it can deter growth as there will not be sufficient amount of funds available to grab growth opportunities as they arise. The important thing to success is getting this stability.

Matching businesses with the appropriate capital for their particular requirements and educating them throughout the complete business funding process is essential.

The first step is to choosing the right amount that you need to borrow for your business. Here I am going to further elaborate the best business funding programs that can help you in the growth of your business.

  1. Working Capital Loan

A working capital loan is made for businesses, who are in good shape with stable revenues that need some assistance stabilizing their working capital. Cash is automatically deducted from your bank account on a daily or weekly basis so you can focus on running your small business.

  • 6 to 17 month term
  • Cash up to $250,000
  • Factor rates 1.15
  • Daily or weekly payments automatically

Benefits

Working capital loans offer immediate relief for businesses that want to infuse more cushion into their working capital. However, the cash under this program do not need to be used as working capital. It’s an outstanding funding solution for any business with pressing capital requirements as traditional funding process is too slow.

Drawbacks

When choosing a short-term loan from an alternative lender, you’re paying more than you would through a bank for speed, ease, and flexibility.

  1. Franchise Financing

Franchise financing is especially designed for franchise owners with a certain level of success and financial stability, franchise financing provides larger-scale investment for business growth at competitive rates. It has pluses in speed, ease, and flexibility.

  • Flexible terms for acquisitions and remodels
  • 90% approval rates
  • Flexible financing up to $1 million
  • Fixed low-monthly payments

Benefits

This business funding program is similar to a traditional term loan, but with competitive interest rates and flexible monthly loan terms. However, unlike a traditional loan (which could take up to 4-5 months), franchise financing program allows you to grab new growth initiatives when opportunity arises. With this funding program, rather than waiting for approval, you can focus on supporting new projects and managing your business.

Drawbacks

There can be a high start-up costs such as buying brand name and you will always owe royalty payments in return for support in operations and advertising.

  1. Merchant Cash Advance

Unlike a business loan, merchant cash advance provide you with capital via buying a portion of your future receivables. Daily remittances are a set percentage of your sales and are automatically deducted from your credit processor or bank account. Perfect for businesses with instable revenue, the merchant cash advance guarantees that your remittances are continually based on what you can afford.

  • 5 to 17 month terms
  • Cash up to $250,000
  • Factor rates 1.15
  • Automatic daily payments

Benefits

Due to the fact that payments are remitted as a percentage of future receivables, you will constantly be able to keep up with payments. Fixed-term loans can place more pressure on a business throughout slow seasons, and cash advance ensures that your payments reflect what you can afford.

Drawbacks

Due to the fact that the repayment amounts are dynamic, it is not easy to plan and project.

  1. Business Line of Credit

Unlike a cash advance or a business loan, a business line of credit provides access to a specified amount of immediate credit that the borrower can use at any time. This funding solution tends to be highly favored for its flexibility as small businesses are frequently uncertain of how much they should borrow, and a business line of credit makes this quantity a flexible range.

  • Term over 6 or 12 months
  • Cash up to $150,000
  • Flexible cash when you require it

Benefits

A business line of credit provides immediate cash when you need it. The flexibility is excellent for businesses who are uncertain whether they have got sufficient working capital and growth capital to manage daily operations.

Drawbacks

Even as the flexibility is satisfactory, small businesses shouldn’t choose a line of credit simply because they’re uncertain of how much amount to borrow. Your business success is compromised when a business does not know where the cash will be used or how much amount of business funding will be required.

Summary
4 Business Funding Programs for Small Business Growth
Article Name
4 Business Funding Programs for Small Business Growth
Description
Every business whether large or small require funding to grow. Here are 4 business funding programs that can help business owners to grow and succeed.
Author
Merchant Advisors
Merchant Advisors
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