Business Financing

Explore Factoring

Factoring is a distinct financing option from a traditional bank loan or a revolving line of credit. You essentially “sell” any outstanding invoices to a factoring company, who then forwards you a portion of the money owed. The factoring company will send you the rest of the money owed once the customer pays the invoice.

Factoring is a solution for businesses that are often stuck waiting for large client invoices to be paid, helping them to boost their cash during the waiting period. However, factoring fees can sometimes be very expensive.

Consider Applying for an SBA Loan

An SBA loan is a type of business finance guaranteed by the U.S. Small Business Administration. An SBA-participating lender, which can be a bank or alternative lender, will finance the actual loan — the SBA guarantees the loan, which means they will pay back the lender in the event of default.

SBA loans are a popular financing option, as they typically offer flexible terms up to 25 years and lower APRs compared to traditional bank loans. However, the SBA has stringent loan qualifications on top of the actual lender’s requirements, and the application process is lengthy.

Look Into a Traditional Bank Loan

When you think “loan” you’re most likely thinking of a traditional loan from a bank. Bank loans are not as popular as they once were, especially for newly opened small businesses. Banks are leery of lending large sums to new businesses — those without a proven track record of profit and a positive credit history are unlikely to be approved.

If, however, you’re an established small business owner, a traditional bank loan can typically offer a larger financing amount than other funding options.

Get a Business Credit Card

Designated small business credit cards tend to have tailored features ideal for small business spending, including higher credit limits, no annual fees and flexible cash back rewards. Many of the most popular business credit cards also offer specific business rewards programs, something you can’t necessarily get with other types of business financing.

Using a small business credit card, as opposed to a personal credit card, can also help you build up your business’s credit history — some credit card companies offer cards designed specifically to build business credit.

Raise Funds From Family and Friends

You can always turn to family and friends to raise investments, but doing so comes with its own set of risks — including putting a strain on these personal relationships. There’s also a temptation to ask for money before creating a formal business plan or determining when the “lenders” will see their money back. You would need to consider if the money you’re asking for would be a straightforward loan, an exchange for equity or another kind of investment benefit.