There are many reasons for making cash finance or loan. The good reasons come from serious, small business people who would like to sustain their business or expand to new opportunities. Bond Street estimates that about 99.95% of small business owners seek cash financing. One mode of financing is when a friend or associate lends you money for your business without any time when you will pay, or without interest. This is a ‘free’ form of financing.
Another mode of financing is called debt financing. This type of loan can be accessed either through a secured loan or unsecured loan. A secured loan is a traditional loan that a financing agency or bank issues to a borrower. The loan is covered by collateral like a house and lot, car, expensive jewelry (diamonds, gold), bank time deposits or other types of securities like an investment certificate.
As an option, you can approach current online lenders who offer fast-released unsecured loans but with a limit on loan ceiling, but charge a higher annual percentage rate or APR. Banks, on the other hand, can offer you more massive loans at a lower APR but will take a longer time to release your credit. This type of cash financing is also called cash flow loan.
If you have to make a cash flow loan, such as a term loan, or open a line of credit like a working capital loan, you will be required to make either a weekly, bi-weekly, or monthly payment. In making cash finance, make sure you use the loan proceeds to fund a project that would help your business grow.
There are many reasons for making cash finance. Your business may be growing and to cope with projected demand, you need to acquire equipment, materials, and supplies, or you need to expand the area of your office. Do you need to hire new staff, or find a new location for your business operations? These are reasons banks or lenders will accept your application for cash financing.
There are also car loans available from banks or one that may be considered as “non-business loans,” even if purchasing a vehicle can be used to enhance a business project. A business credit card can be used to finance debt loan projects. The National Small Business Association (SBA) estimates that about 37% use credit cards for short-term loan purpose.
However, low borrowing limits imposed on business credit cards plus the high APRs, ranging from 13.12% to 19.87%, depending on credit score, make them impractical to cover capital-intensive projects.
Another class of making cash finance is known as a term loan. Mortgages, student loans, or car loans, our term loans. A lump sum cash loan upfront is made by the borrower and paid back in weekly, bi-weekly, or monthly payments throughout the loan term. Bond Street, for instance, offers term loans of up to $1,000,000 with interest rates starting at 6%, for 1 to 3 years in semi-monthly payments.
You need to have a personal credit score of at least 640 to qualify for a term loan at Bond Street. You need to show proof of a minimum of $200,000 in annual sales. Your business must at least two years or more in operation. A term loan may, therefore, be considered as investment money if used for business expansion. As a result of the initial investment, a business may generate a steady increased stream of cash inflows.