Business Finance - For When Your Business Needs Cash
By David Neehly
The saying "you have to spend money to make money" is too true. In order to get your business off the ground or even to expand an existing business it is necessary to lay out quite a bit of money. If you do well, you will make the money back and more, and it is a good investment. But no matter how you get the money, it needs to be spent initially.
Like most people, you probably don't have much spare cash lying around. Even if your business is doing well and growing rapidly, you still would not want to tie up huge sums of your own capital into upgrading your venture. This is where business financing comes in.
Its popularity arises from the fact that it offers many alternatives, to new companies, ones looking for growth, or those that are just strapped for cash temporarily. Business financing is great because it allows you to achieve your aims when you're setting up a business or want to grow, and keeps you afloat in those rainy, stormy days. So your dreams are never sandcastles in the air, and you're always in business. Business financing makes sure that the show goes on.
One of the most basic business financing options is overdraft protection. This is protection that allows you to exceed what you have financially available. Because most institutions cap overdraft protection at around $5,000 for businesses, this is not viable for major expansion or start up. But it does help if you had a bad month but you have some supplies to buy.
Operating lines are among the more popular business financing options. This is because they allow you to dip into a line of credit that acts as additional cash flow. This is usually to help with minor expansion to increased operating costs due to other factors. You do have to pay the money back, but the line is usually very easy to dip into, and it is usually there when you need it.
Term loans are among the most common business financing options for start up businesses or major expansions. These are loans that can run up to more than $100,000 and can be either variable or fixed rate loans. They help you get your business off the ground by allowing you to buy or lease a facility and then outfit it with all of the trappings of a business.
Related to term loans are government options that can help you get started. Government loans and incentives usually carry lower interest rates. However, you often need to show special need or have special qualifications for government
programs. However, before getting your money from a bank, check into government programs to see what is available.
In the final analysis, though, there's nothing like a credit card to
help you out in a crisis. While not practical for major costs like
your initial investment in a new business, they can come to your aid
in various circumstances. Like when you need to meet a pressing payment
for your purchases for instance. And you can take advantage of the
many business cards on offer today, they carry reduced rates of interest,
and reward point incentives that work to your benefit in many ways.
Not only do you get instant credit when you need it, but you can also
manage your company and its finances in a highly efficient manner.