Are you an entrepreneur who has started your own business and now you’ve discovered you need cash? If you’ve been reading what I’ve been writing, then you may have picked up on a theme: you need cash to run a business.

There are three simple words business owners should know … CASH IS KING!

How to Get Your Hands on Cash

Of course there are a number of ways to get cash:

• Find an investor

• Efficiently convert receivables into cash

• Obtain a small business loan, such as a factoring line

Now when you read the above list and give it some thought, which of the choices sounds the most simple? Probably obtaining the small business loan would be the easiest. The ease of that is dependant on the type financing you go after, the credit strength of your company and credit strength of your customers.

If you look at the other options, finding an investor is difficult, and you lose a percentage of the control of your company. Efficiently collecting receivables is difficult as well, as not all customers pay their invoices on time. That’s when you should turn to short-term small business financing.

The Benefits of Short-Term Financing

Here are some ways your business benefit from obtaining short-term financing:

• Short-term business loans are easily accessible. With the advances in technology, many banks and small business lenders have made it quick and easy to obtain small business financing. In some cases it only takes a few days. There is also minimal paperwork required.

In fact, if your business utilizes a small business factoring line through a small business lender or factoring company, and you request a credit limit on one of your customers, it may take only 24 hours to get the credit limit approved, depending on the strength of the company.

• Short-term loans are just that … short term. You as a business owner are not indebted to a lender for a significant period of time. 

• Short-term loans don’t always have to cost an arm and a leg. Depending on the type of financing you go after, it doesn’t always break the bank (no pun intended).  

If you obtain a factoring line, then you only pay fees based on the outstanding invoices. If you factor invoices related to strong creditworthy customers that could pay faster, then you save some money on the fees paid while improving cash flow. In the time I’ve spent in commercial finance, I’ve seen many businesses benefit from the use of short-term financing and at the same time keep fees low.  

• Short-term business loans provide relief when your cash flow is tightening. Small businesses are often waiting for a large invoice to be paid, resulting in cash flow becoming tight. This is where a short-term business loan such as factoring helps alleviate that strain.

Conclusion

As outlined above, setting your business up with a short-term business loan is a great way to keep your cash flow steady. If you are a small business owner contemplating taking out a short-term small business loan, then hopefully this has persuaded you to take advantage of what some banks and lenders have to offer.  

Fast A/R Funding specializes in online factoring, and its many small business clients have realized how factoring has kept their cash flow steady. Download our informative “Factoring 101” guide to see if factoring accounts receivable would be a smart move for your business, or call 888.833.2286 to speak with one of our small business finance consultants.