By Vlad Ehrsam
The saying “you have to spend money to make money” is too true. In order to get your business off the ground or even to expand an existing business it is necessary to lay out quite a bit of money. If you do well, you will make the money back and more, and it is a good investment. But no matter how you get the money, it needs to be spent initially.
Like most people, you probably don’t have much spare cash lying around. Even if your business is doing well and growing rapidly, you still would not want to tie up huge sums of your own capital into upgrading your venture. This is where business financing comes in.
The options for business financing are varied depending on whether you are just starting out, looking to expand or just need some extra cash to tide you over a bad patch. Whatever option you choose, it will help your business stay in the game and pay you dividends in the future.
An overdraft is a common form of business financing. This facility gives you access to funds that exceed what you have in the bank. Since most banks and financial institutions do not sanction more than $5,000 for business purposes, this option is not suitable for start-ups or expansion. You can however, use it to buy your supplies or to see you through a bad month.
And if you’re looking for more substantial sums, you could try an operating line. It’s a line of credit that makes money available to you when you need it. It’s a good option when you’re low on cash and are finding it difficult to meet your commitments. Or when you’re eyeing an expansion project that doesn’t need too much money, the only problem being you don’t have it. This is the time to dip into your credit line. You will have to take the monthly repayments into your projected cash-flows, of course, but at least the money’s there when there’s an emergency.
A term loan is what you should go for if you are starting up a new business or doing a major expansion. With amounts in excess of $100,000 available, you can buy or lease your premises, do up the place and buy all the supplies you will need to get going. Term loans can be either fixed rate or a variable.
But if you really looking for a bargain try government loans before you look into commercial alternatives. They offer many options, including term loans, and come at rates far below prevailing market interest ones. And they offer incentives. But there’s a hitch, you’ll need to prove you qualify in some way, or merit special consideration.
In the final analysis, though, there’s nothing like a credit card to help you out in a crisis. While not practical for major costs like your initial investment in a new business, they can come to your aid in various circumstances. Like when you need to meet a pressing payment for your purchases for instance. And you can take advantage of the many business cards on offer today, they carry reduced rates of interest, and reward point incentives that work to your benefit in many ways. Not only do you get instant credit when you need it, but you can also manage your company and its finances in a highly efficient manner.
About the Author
Vlad Ehrsam is the chief writer for, and editor of Full Info on Business, visit there today for the latest Business advice, and why not sign up for the free Business newsletter.
Don’t reprint this article. Instead, reprint a free unique content version of this same article.
