Factors That Credit Card Companies Look at When Evaluating an Application
Running a business comes with both benefits and challenges. Most problems stem from cash flow inefficiencies. The interesting thing is that cash flow problems are not always caused by poor cash management. For example, you can get a big order from a return client that promises to pay later. Since you trust the person or business, you release the goods and are short on inventory. Since you had already taken the goods on credit from the supplier, you cannot take more inventory until you’ve paid them. Unfortunately, you don’t have the money since you sold the goods on credit. So what’s your next best option? Take a term loan and pay the suppliers to get more inventory.
Understanding the different options available
There are various loan options available to businesses. They include crowdfunding, invoice factoring, term loans, business credit cards, personal loans, and equipment loans. If your business is a startup, you can opt for a personal loan, crowdfunding, or term loans. A personal loan is taken under your name and not the business’s name. This is a great financing option if you are just starting and have no sales history. The lending institution will use your credit history and score to measure your ability to repay the loan. With crowdfunding, you create an online account and present your business idea to the public. Those that find the idea worthy will contribute cash for your venture. Term loans usually have a fixed repayment period and interest rates.
What options are available for established businesses? If your business has been in operation for a while, you can choose invoice factoring, business credit cards, and equipment loans as a financing option. With invoice factoring, you sell the invoice to a lender who then gives you money immediately as they wait for the invoice to be paid. Alternatively, you can use business credit cards to access quick financing and keep things moving. If you want to buy machinery for your business, but don’t have the money, you can opt for an equipment loan.
Contact us today! The above are all the loan options that are available to your business. One thing that you should always keep in mind is that before you borrow, make sure that you can repay the amount. If you need additional information on the types of credit available to businesses, you can contact us.