Home Business Insights 6 Emergency Financing Choices for Small Businesses

6 Emergency Financing Choices for Small Businesses

0
Image source: unsplash.com

With the COVID19 outbreak and lockdowns, many small businesses are struggling to survive. Of course, exceptional circumstances like a global pandemic are not the only reasons your business might require some financial aid. Everyone runs into a rough patch sometimes, and requiring help to keep the business running is nothing to be ashamed of. There are many different ways for you to get your business back on track after you’ve gone through unexpected financial problems. From getting a quick loan to crowdfunding, there is a solution out there for every kind of problem you might be facing. So where can you get the mentioned financial assistance?

In this article, we will answer this question and provide you with enough details to help you get the help you deserve.

So without further ado, let’s begin!

Get the money from your vendors

Image source: unsplash.com

Your vendors make their money through your business, so asking them for a loan could prove to be a great idea. The relationship with your vendors is a partnership of a sort, so asking them for help through a direct loan is not as big of a deal as it may seem. Remember, you’re not looking for empathy here, it’s in their best interest that your company keeps on running.

In some industries these things are a common practice, so do some research about it and don’t miss your chance to make good use of this option.

Crowdfunding and Customer Financing programs

Customer loyalty is extremely important for small businesses. These customers love your products or your services, and they want to see you succeed.

You can probably count on them to help you in times of emergency. Setting up a crowdfunding event can be a great way to get some financial aid. Your customers, friends, and partners are likely to help you, but keep in mind that this probably won’t be enough to get you out of the situation you’re now in. It’s not a very reliable method but it can still help.

Another way of getting financial aid is through customer financing. How does this work? Well, you have to set up a customer financing program first. Your customer applies, gets approved, and you offer them discounts and special offers in exchange for their monthly payments. Of course, for this to work, you’ll need to have exceptionally loyal customers who don’t want to consider any alternatives to your company.

Use your assets

Image source: unsplash.com

Realistically, your company probably owns stuff you’ll be able to sell very easily. An emergency is an emergency, and all the stuff that’s not essential for your work can be replaced with cheaper alternatives. Remember that this is only a temporary solution, just until you get back to where you once were. Turning your assets into cash might not be your favorite solution, but it sometimes has to be done. It’s a small price to pay to save your business.

Another thing you can do is apply for asset-backed financing. There is a number of financial institutions and organizations that offer this kind of service. Make sure to do your research and choose wisely, because one missed payment could mean saying goodbye to your assets. Also, if you’re already loaning from a bank, make sure this doesn’t violate your loan agreement with them first.

Online lenders

Image source: unsplash.com

Getting a loan from a bank can be a lengthy process, and when you need money urgently, you probably won’t have enough time to deal with that. The alternative lies in the online money lenders. It’s much easier to get a loan from these kinds of institutions, especially if it’s a small amount. Still, if you need a huge amount of money, and you don’t want to pay higher interest rates than those you’d pay in a bank, finding a good online lender could prove to be a bit tricky. However, considering that you need help urgently, this is probably the best solution out there. Just make sure to do your research and find a reliable, trustworthy lender. You can click here for more info about one of the best online lenders currently available.

Merchant cash advance

Image source: unsplash.com

If you collect most of your payments via credit cards, a merchant cash advance could be a great source of emergency financing for you. They will lend you money and then take a percentage off your daily or weekly payments. This is a great way to get some emergency financing, but if you don’t expect to receive enough payments in the upcoming period, you won’t be able to get approved for this type of loan.

Still, if you are certain about upcoming payments, and you can prove it, this could be exactly what your business needs. You’ll gain access to your funds pretty quickly, and the approval process is much faster than when you’re getting a traditional bank loan.

Ask your friends and family for help

image source: unsplash.com

Asking your family or friends for a loan is never a comfortable experience. Still, it’s one of the quickest and easiest ways to get a loan. Always choose someone you’re close with and who is in a stable financial situation. Borrowing money from your loved ones is always a risky business since you don’t want to ruin your relationship with them. Always remember to think of it as a business transaction, rather than a personal one. You should create a legal agreement, set a repayment schedule, and offer to pay interest. This will help them trust you even more, and it can help you feel better about the whole ordeal.

All in all, it won’t be easy, and you probably don’t want to do it. Still, you have to realize that these things happen, and there is no shame in asking for help. Just make sure you’re able to repay the loan in a timely manner.

 The conclusion

There are many different sources of emergency financing for small businesses. The one you choose will depend on the type of your business, the amount of cash you require, and your personal preferences.

All in all, there is a solution for every situation. It may not be easy, but it will all be worth it once your business is back to stability and growth. Analyze your situation, find the best solution for your specific circumstances, and most importantly, don’t give up!