Are Resources and Funding Holding You Back?

If you are an entrepreneur, you know how important finding a reliable source of funding is. It can be the key to expanding your business and boosting your revenue. But, finding a good source of funding can be a challenge. Let’s look at this issue and some of the alternative funding arrangements that you can explore.

Why is Funding So Important?

Once you have built a successful small business, it’s only natural to start thinking about how you can take things to the next level. Let’s look at some of the reasons why a small business might need to raise capital.

Expanding a Business

If you have been operating a business successfully, it’s natural to start thinking about growing it. This can mean opening a second location or increasing the capacity of the existing one. If done correctly, this can boost the value of your organization. The only problem is that it is very expensive. If you can’t get a loan, you won’t be able to afford the expansion. This can make it very difficult to grow your business.

Buy a Business

Sometimes, it might be the right time to start an enterprise. Buying an existing business is a great way to get going. You will have all of the equipment. Sometimes, you will even have a customer base. But, after they’ve spent years building the organization, the former owner will want to be fairly compensated. As a result, you’ll often need to spend a lot of money to acquire the organization.

Increase Staff

As your business grows, it will get harder to run. More customers mean more time needed preparing the product or service. To help you cope, you’ll often need to hire more staff. Not only will this bring more skills into the organization, but it will also improve the local economy. But more people means spending more money.

Increase Services

A great way to grow your business is by increasing the number of services you provide. This can help you attract more customers and raise your profits. However, you will need to spend more time researching, designing, and implementing the services before they are launched. All of this will require a lot of capital.

Updating Equipment

Finally, every business will need equipment to operate successfully. Over time, technological improvements will mean that more effective pieces of machinery are available. Upgrading can be a big expense. But it can save you a lot of time and money in the long-term, helping you become more productive.

The Problem With Banks

There are dozens of excellent ways that you can put funding to work. Whether you’re trying to build a new organization or expand an existing one, your business needs to get capital. The next question is where you are planning to get the funds from.

Often, your first thought will be turning to a bank. These are some of the biggest lending institutions. However, they also have a lot of strict requirements that you’ll need to follow. If you have a poor credit history, you will find it very difficult to get money from the banks. Most will reject your claim outright. Others will make you pay a high-interest rate.

Even if you do have the required credit, you will need to go through a long and complex process. There are lots of forms to fill out and documents to provide. As a result, it will often be a few months before the loan is approved. If you needed the money urgently, you will be disappointed.

Sadly, these practices are hurting small businesses across the country.  It makes it more challenging for people to get the funds that they require. For some, it can mean that they aren’t able to upgrade their business and attract new clients. In other cases, getting rejected by a bank can cause you to miss out on a vital opportunity to expand your business.

There is an Alternative

As you can imagine, many people are sick of the banks determining whether or not their business can get the funds it needs. If you have a poor credit history, it will be nearly impossible to get them to approve a loan. Because of this, more people are turning to alternative funding companies, like the South Florida Funding Group. But what sets these institutions apart?

First, these lenders aren’t banks. They can connect you with lenders who will be more flexible about their funding requirements. If you have a poor credit history, they can overlook it. Instead, they will focus on the health of your business. Because of this, you might need to show a minimum FICO or monthly revenue. This will make it easier for you to get the funds you need to grow your business.

Another important distinction is the flexibility that you can get. As we’ll see later, there are plenty of funding options that you can explore. This makes it easy for you to find the best one to suit your needs. Additionally, if you hit a rough patch, you can call the lender. They might be able to change the agreement to something that better suits your business. 

They are also able to provide the funds faster. You’ll just need to provide the essential documents. For example, you’ll need to show the bank balances from the last three months. You might also need to show your credit card sales statements.  You won’t need to fill out any long complicated forms. As a result, you’ll be able to get the money within a few days, rather than waiting months for the bank to approve a loan. This is a great way to make sure that you can act when an opportunity presents itself.

What Alternative Funding Options Are Available?

As we’ve seen, there are a few reasons why it makes sense for a small business owner to choose an alternative funding agreement. Thankfully, there is a wide variety of loan options that you can use. This makes it easy for you to select the perfect option to suit your business. These are some of the most popular funding options:

Merchant Cash Advance

In many cases, your business will need to get access to capital quickly. This will let you take advantage of any opportunities that pop up. As we’ve mentioned, going through a bank can take a very long time. Because of this, you might want to consider getting a merchant cash advance. Once you’re approved, you can have the money within two to five days. The higher your FICO score and cash flow, the faster you will be able to get your money. 

The amount that you will be able to apply for will often depend on the amount your business is making each month. This can mean getting between $5,000 to $500,000. Once you get the money, you will need to start making repayments. These will be calculated as a percentage of your future sales. This makes it easier to repay the funds. These loans will last for between four to 18 months.

To be eligible, you will need to have between three to six months of experience operating the business. You will also need to have a FICO score of over 500. Your monthly revenues will need to be at least $10,000.

Unsecured Business Line of Credit

Another popular option that you can explore is getting an unsecured business line of credit. This is one of the most flexible funding programs. In this case, you’ll need to provide your bank statements for the last three months. You can then get approved for a line of credit. This will be between $10,000 to $500,0000. Whenever you need capital, you can turn to this credit line. Once established, you’ll be able to do this over and over again. You should have the money within 24 to 48 hours. You’ll only need to make interest payments on the amounts that you have borrowed. Often, the repayment period will be between six to 12 months. The interest rates may start at 12 percent.

To be eligible for this type of funding agreement you will need to have six months of experience running the business. You will also need to make sure that you have a FICO score of over 650. Your monthly revenues will need to be over $25,000.

Unsecured and Secured Business Loans

There are two types of business loans that you can consider. First, you might want to consider an unsecured loan. This means that you will be able to get the funds, without needing any collateral. This lowers the risk of losing your valuable items. Instead, you will need to use a personal guarantee. This ensures that you will be made personally responsible if the business is unable to make repayments. However, the lender might compensate for this risk by raising the interest rate. Typically, an unsecured loan will only be available to people who have a good credit score.

On the other hand, you might want to use a secured loan. In this case, you will need to use your valuable items as collateral. This will operate like a standard term loan. Often, this will let you get faster approval for a standard SBA loan.

If you want to pursue one of these loans, you will need to have been in the business for at least three to six months. Your annual revenue will need to be over $100,000.  You will need to show your credit card transactions for the last three months. These will tell you how much you are approved for. These loans can be worth between $10,000 up to a maximum of $500,000. You’ll be approved within 24 hours. Once you are, the money can be in your account within two to three days.

Another interesting aspect of this loan is how it will be repaid. The repayments will be calculated as a fraction of your company’s future weekly or monthly revenue. Sometimes, business conditions will change. This can cause your revenue to drop. During these periods, your repayments will also decline. If your revenues go up, you won’t be required to pay more.

Equipment Leasing and Financing

Many businesses require specific equipment to run their organization. Purchasing this gear can be very expensive. However, there is a solution. You can choose to lease your equipment or you can finance it. When you lease the equipment, you will be able to rent it. You’ll need to make monthly repayments. However, at the end of the rental period, you won’t be the owner of the equipment.

On the other hand, you can opt to finance the equipment. You’ll still need to make monthly repayments. The equipment can be used as collateral, to help secure the loan. As a result, at the end of the purchase period, the gear will belong to you. This can be a good way to secure expensive pieces of equipment that you will need for the long-term.

These agreements have the fastest approval process. Once you submit the documents you will know whether you were approved within approximately 24 hours. If you get approved, you will be able to get equipment valued at between $250,000 to a maximum of $1,500,000. The loan repayment terms will be between six months up to 24 months, depending on the value of the equipment you require. South Florida Funding Group offers deferred payments and 100 percent financing options. To be eligible, you will need to have been in business for at least three months. You will also need to show a monthly revenue of over $6,000.

SBA Loans

SBA loans are considered to be the ideal type of business financing. They are backed by the government. Because of this, you can use these to finance a larger project. You’ll be able to get between $125,000 to $10,000,000. At the higher end, you can use the capital to invest in real estate.

However, because this is backed by the government, there will be a more extensive paperwork process. You will need to provide a range of important information. For example, you will need to show your Balance Sheets, Cash Flow Statements, Leases, and ownership documents. You might also need to sign a personal guarantee. To be eligible, you will need to have a minimum FICO score of 650. You’ll also need to show that you have two years of experience. You can’t have any tax liens or have experienced bankruptcy in the last three years. If you are seeking funding for a start-up you might be able to get an SBA loan. But you will need to show that you have experience in the area.

You’ll know within two to four weeks whether your application was successful. Once the loan has been approved, you will be able to get the money within three to four months. The repayment terms will depend on the type of loan you took out. Sometimes it can be as short as a year. If you get a loan to buy real estate, it might be closer to 25 years. The interest rates will also vary. 

How Can I Find the Right Loan For My Business?

As we’ve seen, there are plenty of funding options for you to explore. But this variety of choices can often work against a small business owner. It can be hard to decide which one will be the best for your circumstance. To help you decide, there are a few things that you might want to think about.

First, you’ll need to think about why you are seeking funding. For example, do you need a quick cash injection? In this case, you might want to consider a merchant cash advance, secured or unsecured business loan, or taking out a business line of credit. If you want to get some new equipment, it can be best to think about leasing or financing. If you have a more substantial project you might be better off with an SBA loan.

It’s also important to look at the eligibility requirements to make sure that you qualify. The next thing that you’ll need to check is the repayment details. This will ensure that you will be able to keep up with the payments. Finally, it’s important to think about how quickly you need the money. If you are still in doubt, you can give one of our friendly advisors a call on 786-544-2700. They will be able to discuss your situation and make it easier for you to find the right funding option.  

Contact South Florida Funding Group Today

Getting the right funding for your business is critical. Failure to get the resources they need can be holding many small businesses back. Because of this, many entrepreneurs are turning to alternative funding groups. They offer faster funding than the banks, and you can still get money if you have a low credit score. If this approach interests you, the South Florida Funding Group can help. Give us a call on 786-544-2700 today to get more information about how you can apply for these loans.