As a business owner, you strive to prepare for all of the difficulties your company may face. Even during periods of great success, we must all prepare for challenges lurking around the corner. Generally, most trials a business may face can be overcome with more money. Of course, these are also the times when cash flow can be at their lowest. The good news is that there are cash flow options. Just as you might use title loans to overcome personal finance troubles, you can access emergency loans for your business. With that in mind, let’s look at the emergency financing options you may have available.
Bank Loans, Credit Lines and Credit Increases
Bank loans can range from a few months to several years. They’re often the ideal way to borrow because of the favorable terms. If your business has developed a history with a particular bank, you may be able to get a loan on short notice. Another option is a credit line, which can be opened quickly with good credit. If you already have a line of credit, an extension to that line is another option.
The Small Business Association doesn’t just help get new businesses off the ground. The SBA helps prepare and deal with emergencies. If you’re facing an emergency that threatens your business and cannot get a loan through a traditional lender, you may find the assistance you need via the SBA.
If there are extenuating circumstances, such as a natural disaster, then you may be eligible for special assistance. Agencies like FEMA often help facilitate this kind of special assistance. Even the SBA has funds set aside and sometimes awards grants, which don’t have to be repaid.
Alternative lenders are becoming more prevalent, and they offer a path for creditworthy businesses to traditional financial institutions that wouldn’t otherwise be there. If you face an emergency but can’t get a bank loan, these alternative lenders may be willing to take on that risk. An advantage this approach offers is being able spread the money you need across multiple entities willing to assume that risk.
If your business lacks the credit necessary for traditional forms of lending, borrowing with collateral may be an alternative. Businesses can often acquire short-term loans on short notice using assets the business holds or even personal assets held by the business owner. Common examples of this collateral include commercial real estate, privately held real estate, inventory and equipment.
Bridge financing is a type of financing that assists a business in meeting its financial obligations while it waits for other entities to meet theirs. For instance, a business may be waiting on a large payment from a client or may be waiting on a large financing deal to be completed by a bank. These bridges are usually for relatively small amounts over short periods and let a business bridge a financial gap.
Emergency Equipment Leasing
If the emergency your business faces is that you need equipment or similar assets that you cannot afford at the moment, emergency leasing may be available. These opportunities are generally offered directly through the vendor and may or may not be backed by a bank. This type of leasing usually works in one of two ways. It can let you lease the equipment you need until you’re in a position to purchase, or it can defer any lease payments owed to a future date.
A final option is a cash advance. These are similar to bridge loans in some ways but involve the sale of future credit card deposits or similar transactions. In other words, you receive cash based on future sales at the cost of some percentage of those future sales. The cost of this option can be quite high compared to the other options presented here, but it’s sometimes the only option for a business owner in pinch.