#QuickGuide to the different #Financing options you should use to #GrowYourBusiness in #2024.

Here is the 2024 Business owners guide to #BusinessFinancing. We wanted to help inform business owners of the basic options out there and must also say #BuyerBeware if it sounds to good to be true it often is. Unlike personal financing #BusinessFinancing is #Unregulated and if the rate sounds to low and it does not have collateral then it may not be real, #NeverPayUpfront...

Here are some common types of business loans:

1. Term Loans: Amounts up to $500k-5M provided private lenders & banks traditional loans with a fixed repayment term, & interest rate10-20 (Apr%), and monthly payments. Takes 2-4 weeks ( Up to $500k secured by the Business, Higher amounts secured by hard collateral and may contain a PG)Uses: General working capital, expansion, equipment purchases.
2. #SBA Loans AKA the #GoldStandard (Small Business Administration Loans): Government-backed Bank issued Term loans (50-85% guarantee) with favorable terms and lower interest rates. Fully Secured By Business through Equipment or Real estate with a PG. Generally Lower Apr% & Longer terms 5-25 years. Takes 8-12 weeks and requires profitability.Use: Start-up costs, working capital, real estate purchase or business purchase $5M max (more if Franchise).
3. Business Line of Credit: Revolving credit facility with a set credit limit that can be used and repaid as needed. Draw as needed and pay for the time used. Interest Only and principal and interest up to $1MillionUses: Managing cash flow, covering short-term expenses.
4. Invoice Financing (Accounts Receivable Financing):Description: Advances based on outstanding invoices, where the invoices serve as collateral.Use: Managing cash flow, bridging gaps between invoice issuance and payment.
5. Merchant Cash Advances Aka #MCA/#FutureReceivablespurchase: Advances based on future business receivables or credit card sales up to $5Million, repaid through a percentage of daily, weekly, bi-weekly and even a few monthly credit card transactions or total sales(bank deposits). Funds fast, good credit to bad credit. Most are unsecured (no UCC) but secured by business future sales. Rates as low as 15%-55% based on estimated term and risk. Easier application and Funds in 24 hours. A lot of competition will make it easy to qualify but you lose 10-25% of your sales so make sure you #UseWisely for #HighProfit 30-90 day transactions. .Uses: Short-term financing, quick access to capital, Inventory, Payroll.
6. Microloans: Small loans provided by micro-lenders or non-profit organizations. Often time credit based and #Unsecured. max between $25k-$50k Use: Start-up costs, small capital needs.
7. Bridge Loans: Short-term loans to bridge a financial gap until more permanent financing is secured. Often used interchangeably with #InvoiceFactoring and other shorter term financing products. Prices vary and can be based on your customer's credit or your inventory & Generally lesser or lower rates. Use: Temporary funding needs, transitioning between financing.
8. Personal Loans for Business: Loans obtained by business owners using personal credit for the business owners that have a higher credit score above 700 a declared income stream. ranging from $10-$100k (Unsecured)Use: Small business expenses, startup costs, purchases.

It crucial for you to carefully assess your financial needs by looking at the current profitability VS profitability after you complete the project you are looking to finance and what will you end up keeping after all financing costs & fees. Determine your repayment capacity by looking at how much the business spends vs what the business deposits every month and see if the specific purpose of the loan will justifiably increase the cash-flow before choosing the most suitable type of business loan. Additionally, understanding all the terms, interest rates, and repayment structures is essential for making informed decisions. This is not installing a program on the computer so #AlwaysReadAgreements