Almost all companies end up relying on some type of financing from time to time. Good thing plenty of financing options are available for organizations that have healthy credit profiles and that need temporary access to money.
Smaller businesses seek financial assistance for a variety of reasons. Some land big contracts and need cash for fulfillment. Others have expansion goals that require immediate financing.
How do you know which type of financing is the right choice for your goals? Below, we’ll explore four options: equipment financing, a business credit card, a business line of credit, or a business working capital loan.
Business Working Capital Loans: The Essentials
Consider business working capital loans. They can be used for anything operational, such as adding seasonal workers and buying inventory, or improving your tech stack. Working capital loans through Marlin’s capital solutions allow companies to access up to $200,000 within a couple of days, and the appealing interest rates won’t vary.
The terms of working capital loans for small business will depend on your creditworthiness, the amount you request, and your ability to repay the loan amount. For instance, Marlin’s working capital loan terms can be as short as six months. Because terms are established at the start, you’ll always know how much you’re paying monthly. Additionally, you won’t be locked into a long-term commitment. Plus, fast working capital loans can, once approved, provide the money you need within 48 hours.
Equipment Financing: What You Need to Know
If you’re looking to update your business equipment — heavy machinery, computer software, etc. — Marlin’s equipment financing can help you manage the cost. Purchasing new equipment requires a large amount of capital upfront, which isn’t always feasible for new businesses.
With equipment financing, you can secure loan payment terms from 12 to 72 months based on the amount of the purchase. This process helps you manage your money wisely in addition to your other most valuable resource: time. Marlin’s approach to equipment financing is quick and convenient, from the application process to decision-making. After an application is approved, you can fill out the digital paperwork, and Marlin will send the money directly to the equipment provider. Your equipment is all set to be delivered and installed.
Business Credit Cards: A Brief Overview
Business credit cards give you instant buying power, but they do come at a price. You’ll have to agree to terms like a variable annual percentage rate depending on your credit score and whether your payments come on time.
A business credit card makes the most sense for minor expenses, such as a $1,000 software upgrade. Some programs offer points or other rewards. Business credit cards are also valuable if you don’t want to secure credit against an asset, such as equity in real estate. However, many business credit cards are opened under the business owner’s personal credit, so the account and the revolving balance will impact the owner’s personal credit score.
These programs tend to have variable rates, potential annual fees, and inconsistent repayment amounts. Sometimes, that’s to the business’s advantage: Business credit card lenders will offer low introductory rates, occasionally at 0% for a limited time. This can be a boon if you’re buying something today and can pay for it entirely in months.
Be aware that you probably won’t want to use your business credit card to obtain cash, either, as you’ll be charged at exceptionally higher interest rates than if you applied for a line of credit or a working capital loan.
Business Lines of Credit: An At-a-Glance Explanation
Like business credit cards, traditional lines of credit offer revolving credit. You gain access to available cash at your disposal — at a maximum set limit. Typically, the limit is generous, making a line of credit good for midsize and some larger purchases.
Lines of credit are not made available for most small businesses, yet the borrowers benefit from the typically competitive rates in business lines of credit. The application process can be lengthy, including a full financial review. Most lenders will want collateral to partner with you. Therefore, you’ll be putting up some assets in order to gain immediate cash or buying power.
Some lenders will ask for a payoff without warning, which could leave you in a strapped financial situation. Your line of credit should allow you to move lump sums into your bank account at attractive interest rates. Most lenders will let you pay off your balance at once without a penalty. Yet, you’ll have to be careful about sitting on a high percentage of your line of credit for too long.
Thriving businesses require cash. If you are considering obtaining additional funding, use this flowchart to help identify which solution might be best for your company’s current needs.
Don’t assume you have to wait to take advantage of opportunities or scale. Instead, contact a Business Funding Advisor at 1.888.479.9111. We can help you decide which financial vehicle is right for your needs and can get you on track for getting a working capital loan.