If you have a small business, then you know every day is do or die. A critical aspect to small business success is getting your hands on enough cash to keep the doors open and the lights on. As such, finding financing solutions to grow your small business is important. Sure you need to manage your cash wisely, but if you are growing fast then it seems like you never have enough of the green stuff to go around.
For years the only options for small businesses were banks and the Small Business Administration (SBA). However, both have become harder to approach in recent years. Big banks have more or less stopped lending to small businesses and the SBA literally ran out of money for their most popular program last year. Only after President Obama signed an authorization was the program able to continue providing guarantees for small business loans.
Let’s face it, running a small business on a cash-only basis may actually be costing you money. This is true even if you are running a coffee shop as customers tend to spend more when they use their credit cards. So this is where working with a small business lender can help your business grow.
These lenders offer programs which are more flexible than traditional lenders. In some cases, all you need is a business banking account and a credit card machine. It is just that simple and the programs they offer can include working capital loans, equipment loans, inventory loans, lines of credit, and even merchant cash advance solutions.
While some quarters call these lenders ‘alternative’. This is only because they offer a better way to get the funding you need to grow your small business. For example, San Diego-based Mulligan Funding has provided more than $100 million in financing to thousands of businesses throughout the country.
Now we get to the fun part. How these lenders help you grow. Knowing small businesses is the first step, but the real magic is how they have structured their programs. As mentioned many of these lenders only require bank statements and a credit card machine.
This is important as they have streamlined the process in a way that matters most for a small business – how you get paid. Compare this to a bank or the SBA. They will require a detailed loan application, a business plan, and collateral – usually your home.
No wonder millions of small business are choosing small business lenders. Last year former Treasury Secretary Larry Summers announced that he expects these lenders to eventually account for more than 70% of all small business loans.
Even J.P. Morgan announced they were getting in on the action by signing an agreement with an online lender. However, this means that some of the online lenders have raised their credit score criteria. This is almost the opposite of their original mission which was to help small businesses grow.
One door closes and another opens. While online lenders have received a lot of press in recent years a number of smaller, more flexible lenders have filled the void.
So where do you begin? The first step is developing a plan for what you need. This means understanding the cash requirements of your business and how getting some extra cash would help you grow faster. It is important to know that small business lenders want to work with you. But to make it easy you need to have plan in place for the financing.
Also, explore the options. Figure out how you will repay the loan and whether there are any penalties for repaying the loan early. Fortunately, most small business lenders will allow you to repay without penalty, but it always helps to ask.
Once you get your loan, do not think of it as the end. It is just the beginning. Developing a relationship with a small business lender is a key to the success of your business. As such, you want to make sure you remain on good terms with your lender of choice. Pay the loan as scheduled, and importantly keep a relationship with your loan officer. You’ll never know when you will their help to keep your business growing.