When you own a small business, the right lines of credit can help you get everything you need now and pay for it when the profits roll in. This can help companies purchase supplies and products to sell as well as pay for marketing campaigns or for the seasonal ups and downs they experience. It is a good idea to know a bit about some of the types of credit lines your company can get before you sign any paperwork.
Traditional Bank Credit
Traditional bank credit lines are one of the first places many businesses look for cash flow solutions. These lines allow you to repeatedly borrow and pay balances when needed and interest is usually only charged on the outstanding monthly balance. If your business has little credit, or cannot show sufficient streams of revenue, then you may be required to put up collateral or you could be denied.
SBA 7(a) Program
The Small Business Administration does not offer lines of credit, but the 7(a) loan program can help new businesses in much the same ways that a credit line would. This program can offer up to five million dollars to new businesses to help gather the supplies and resources need to weather the first couple of years. Many banks work with this program because the SBA will shoulder some of the risks for the loan and you can usually get more information from your bank about this program.
Crowdfunding
Crowdfunding has become one of the most popular ways to finance a new business venture, especially if you are opening a company to sell a new and innovative line of products. This can be a tricky one to break into because you have to convince your potential investors, and future customers, that your company will work in the long-term, but when done right, you can see a large amount of funding appear practically overnight. This means developing a convincing pitch and having incentive tiers for investors to choose how much they want to send.
Investors
Seeking out a smaller number of higher dollar amounts investors is another way to get the cash flow you are looking for. You can reach out through your networking contacts and business mentors to find ones interested in your products, services, and company. You will still need a pretty good pitch and put in a lot of legwork though.
Lines of credit are a good way for businesses to manage cash flow, you can also work with SBA programs or investors to get your company started. Crowdfunding is another good way to get funding as well as a pool of potential customers to target with future marketing campaigns.
