The landscape of small business funding is constantly evolving. More and more options are becoming available to business owners than ever before. Over half of all small businesses seek funding from alternative sources these days. As small businesses continue to face challenges when it comes to getting the working capital they need, it’s important that they are taking advantage of the right type of funding to help their business grow. Small business lending has grown in popularity in recent years, and there is plenty of buzz about it. Are you wondering how small business owners know when to pursue this option?
The most common answer to that question is that businesses sometimes incur unexpected expenses or opportunities that require the use of quick capital. Time and time again I see small businesses with great financial status be presented with life changing opportunities for their business and find themselves in need of quick working capital. For example, we recently funded a specialized doctor’s practice $250,000 to expand beyond the 5 locations he already owns. This was in October. It is now December and he has seen so much success from the working capital we provided him that we just funded him another $350,000. Access to additional working capital can provide an already successful business with both freedom and flexibility to take advantage of opportunities that can substantially improve the health of your business.
Most of the time a small business is not going to have much cash in reserve for these opportunities or challenges that present themselves at random. Alternative funding sources can help in those stick situations where you need cash now. The reality is that banks aren’t equipped to provide you with working capital at the speeds you need. It also isn’t profitable for them to provide loans of under $200,000.
What are some scenarios in which seeking alternative lending sources would be a great option?
- Expanding to a new location
- Buying out a partner or simply avoiding having to ever take on a partner in the first place. One who will own a chunk of the business and profits for life.
- Purchasing discounted inventory, raw material or new equipment at an unbelievable price.
- Fluctuations in the economy that could have a harmful impact on your business.
- Harsh weather that forces a business to close days on end.
- Unexpected obstacles that put pressure on your cash flow and/or require fast cash to cover expenditures.
In order to determine exactly which funding option would best suit your business needs, you must consider what needs to be funded and how fast you’ll need it. It’s important for small business owners to understand the rates and terms of each separate loan option. So whether you’re a restaurant, a medical practice, a small shop or a retailer, carefully reviewing all available loan options based on the specific needs of your business. Taking advantage of the opportunities alternate lenders offer to gain extra working capital could be what makes or breaks your business, so choose wisely when it comes to funding your business.
Working With Sprout
Sprout is an online marketplace where businesses come to compare and save on small business loans. You go to www.SproutLending.com and simply fill out a profile or call us at 800-865-6057. Based on that information you provided, Sprout suggests the best matches depending on the amount and purpose of the business loan you are seeking. Last year, Sprout and it’s staff was responsible for over $100 million in loan approvals.