Getting Out of Common Financial Jams Without Business Credit

It takes money to run a business – and a lot of it. Even a business that is generating revenue can run into financial issues that require more cash than they have on hand to take care of. From needing to hire new staff to an inventory shortage, there are a plethora of things that could go wrong. One of the first solutions business owners turn to is borrowing. However, if you don’t have ideal business credit, getting approved for a loan can be difficult. Fortunately, there are financial solutions that businesses can use to get out of common financial jams.

Problem: Cash Flow

Having accessible cash on hand to take care of business needs is a must. However, even a business who appears to be doing great with sales can be in trouble behind the scenes. While the books may show that you’re selling products or services quickly, if your clients or customers aren’t paying for them on time, you haven’t actually made any money. If you’re customers aren’t paying this essentially means that you’re taking money from elsewhere to stay afloat.

Solution: Accounts Receivable Factoring/Financing

Fortunately, if you’re having a hard time collecting invoices you can in turn apply for an accounts receivable loan. Accounts receivable financing is a contract in which your company would use your outstanding invoices as collateral to receive cash up front. Or you can use a factoring service. They will provide you with a percentage of the outstanding balance and assume the responsibility of collecting the debt from your customers.

Problem: Updated Equipment

Every business uses some form of machinery to operate. Whether it’s microscopes, computers, or office equipment, when it breaks down or becomes less efficient, replacing it is the only way to save money and improve business. Unfortunately, most of these items aren’t cheap which can leave businesses with smaller bank accounts tapped out.

Solution: Equipment Financing or Leasing

Equipment financing companies like Tetra Financial offer financing and leasing options for businesses in various industries. Using the purchased items as collateral, businesses are able to secure deals with financing companies to facilitate the purchase.

Problem: Need for New Staff

Though many small businesses today start off as a one man show, most entrepreneurs realize their need for help in taking their business to the next level. Since no one does anything for free these days, you’ll need to pay whoever you hire to assist you. When cash is low or you have nowhere to pull it from, this can create a problem.

Solution: Hire Freelancers and Bartering

Going without help can ultimately hurt the quality of your brand, but there are other options that may work better with your budget. Hiring freelance workers, for instance, allows you to pay for the services you need when you need them as opposed to paying an employee to work full-time. Another option would be to barter with another entrepreneur. By offering to complete a service for them in exchange for their services, you can save money.

Though there are ways to get around some financial jams in business the truth is many of them require a lot of upfront cash. Most businesses rely heavily on lending options and financial institutions to tide them over until they’re able to cover the expense themselves. A good credit rating gets you approved more often, lower interest rates, and better loan terms to cover all your business expenses. However, as you work to your way to better business credit, the above-mentioned solutions should help you get out of a jam.