Small Business Finance – How It Can Work For You

Most small businesses start with some form of small business finance facility, often drawing collateral from the owner’s personal assets.  Because of this, most owners pay closer and more personal attention to their businesses. It is also for this reason that most small businesses are single proprietorships. However, access to small business finance facilities is much more difficult for a small business.  Conventional financing institutions such as banks find that small businesses have very low survival rates and are therefore high risk clients.  This is no cause for despair h however, because there are alternative ways to get the needed funds.  Business cash advances and small business loan without collateral are just two types of small business finance facilities that are easily accessible and features a lighter payment scheme.

                These newer funding facilities do not require business plans or extensive financial statements and near perfect credit scores but they do evaluate their applicants based on capacity to pay and the current market conditions.  It is up to you to determine how much you need and how much of your profits you are willing to part with. This is why a closer analysis of your cash flow is as important to you as it is to the financiers. Understand that you have to add another cost to your operations which is cost of money. 

                It is also crucial that prior to applying for and small business finance facility, you have already determined the loan amount that you will require.  It is a mistake to underestimate your funding needs.  It is better to give allowances than end up with an incomplete project, which could translate to loss of profits. 

                It is also not a good idea to overestimate the funds you need.  This could add unnecessary burden to your business and put a strain on your cash flow.  The higher the amount borrowed equals higher cost of money, a cost that does not generate income.

                Small businesses tend to renew their loan account after a complete loan cycle.  This is why it is important to review the business’ performance before the loan cycle ends.

                Small business finance is about helping small businesses overcome the challenges of daily operations, the hurdles of innovation, research and much needed marketing to boost sales and market presence.   Financing companies recognise these needs and have found ways to make access to funds easier and even easier to repay.  Growth for small businesses also means the growth of the institutions that finance them.