If your business is struggling, the idea of seeking finance could feel especially daunting. However, there are a number of options that could be available to you if you carefully consider your circumstances. We’ve explored some of the most common funding solutions available to struggling businesses so you can select the option that’s most appropriate for you and your situation.
Credit cardsIf you’re in need of a quick financial fix, a business credit card could be the best option for you. Typically, credit cards are provided with a fast turnaround time and with significantly fewer requirements than loans or other finance options. Credit cards also provide short term financial assistance without leaving you struggling to pay off a significant sum of money. However, be wary of the high-interest rates and ensure you don’t take on a financial burden that will leave you in hot water further down the line.
Invoice financingIf you’re waiting for clients or customers to pay you but the delay is causing financial problems, you could turn to invoice financing to bridge the gap. The basic idea is that lenders provide you with the money you’re owed upfront based on your client invoices. You will then use this money to cover any expenses you have until the invoices are paid and you can pay them back - plus interest. This option is ideal for businesses with large clients that pay infrequently or clients that repeatedly fail to pay on time.
Equipment financingSimilar to the above, you can borrow money for equipment you need before you have the money in your account, using the equipment as its own collateral. Lenders will then be able to use the sale of the equipment to pay off the debts should you not pay the money you owe. In the meantime, you’ll have the opportunity to make use of new equipment that may allow you to boost your sales and subsequently pay off your debts.
CrowdfundingSimply creating an account on a crowdfunding site and asking for funds to support your waning business is unlikely to work, but if you’re short a bit of cash and you’re able to sell yourself you could be in luck. The aim of the game with crowdfunding is to ensure you’re giving something back to those investing their money. If you have a product or service that you can offer (or would be able to offer with the injection of some money) make sure you set out exactly what your backers would gain for providing you with financial support. You’ll also need to do your research and set out a clear plan so crowdfunders will know their cash is being invested wisely.
Get a loanIf your business is struggling it may not be an easy sell should you approach a loan manager for some financial support. However, if you can deliver an impassioned and (more importantly) logical plan that states how the money will transform your business you could be able to secure the funds you need. Just remember that the bank will want to know they can get a good return on their investment, so be prepared to state your case before you approach them.
Borrow money from family or friendsIt’s not always easy to approach people you know and beg for financial help, but that could be the best option if you’re a small business in need of monetary support. As with all the other options, you’ll have to make sure you’ve fully researched your plan so you know you’ll be investing it wisely. Additionally, you’ll want to make sure you set out a clear (and manageable) repayment plan so you don’t risk damaging a relationship by delivering late repayments.
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