Covid 19 or Coronavirus has damaged small businesses across the world badly. As the affected cases are surging, it appears that the virus is here to stay, possibly for another season.
Small and medium enterprises are suffering from a host of issues like supply chain, logistics, cash flow, and demand issues. Many have even gone out of business solely because of the pandemic. If your firm is facing challenging times or even struggling to continue trading, this doesn’t mean that everything ends for you now. There are plethoras of financing options for commercial purposes that have been hurt because of the pandemic.
Let’s explore some emergency finance options for small businesses which have been tailored to help them sustain the pandemic and come out a winner.
Is there a cash flow shortage?
It doesn’t matter what a savvy owner you are; you may still not know about all of the finance options that are available in the current market. As high-street lenders have limited their financing of small and medium enterprises, many other alternative financing options have popped up.
There is a wide variety available for the owners who want to seek emergency funding. However, the kind of loan you take out and the type of loan a lender sanctions to you depends on your company’s profile and requirements. There are plenty of alternatives available, like invoice financing or merchant cash advances.
Is your business suffering from seasonal trading issues?
Companies may have an unpredictable sales cycle. Let take an example of heaters. Assume you sell heaters that do profitable earning during the fall and winter season but not so much during the summer months. When sales are limited, and costs are surging, a host of potential problems may arise at any moment, and your venture may begin to crumble and struggle.
You can take out an emergency loan to ease your financial woes, but you might be needed to satisfy specific eligibility criteria. You can try asset financing too if you own heavy and costly equipment, but it is a risky affair as the lender may assume ownership of the asset if you fail to pay in time.
Banks and lenders are providing Covid 19 relief fund that you apply for, but the competition is relatively high. So, here is how you can get the necessary funds when needed for your struggling company using some alternative ideas:
- Business credit card
Business credit cards are a general commodity, and almost all firms have it. It can prove to be a powerful component of your financing strategy when used wisely. Different lenders have varied terms so you can comb the market for the most effective and powerful credit cards that offer a low rate of interest and flexible payment options.
These credit cards prove to be quite useful when the budget is tight as they are generally easy to qualify compared to small and medium loans. They also come with rewards and bonuses as you earn as you spend. Moreover, they help in improving your credit score, which will further help you apply for better loans in the future.
2. General business loan
A small business loan is exactly what it sounds like. You take out a loan over your credit score or finance it against an asset depending on whether it is a secured on or an unsecured one. It is taken out over a specific period during or after which you pay it back with a specific rate of interest.
What you should consider is that since the pandemic has hurt economies all across the world, major banks and lending organisations have limited their loan applications. If you have a preexisting relationship with a lender or bank, it might work in your favour.
Try applying with a bank with which you already have a bank account or have taken out a personal loan as it improves your chances of approval.
3. A Business line of credit
A business line of credit or LOC is a simple, revolving loan that lets you access a fixed amount of capital whenever you need to meet short term needs. You can use the line of credit to meet short-term financing needs like
- Purchasing inventory
- Repairing equipment
- Financing a sales or marketing campaign
- Sustaining losses when there is a seasonal low in demand for your product/services
You will have to pay back the money you borrow with the accumulated interest, but there is no need to make monthly payments. However, keep in mind that the line of credit often comes with a high-interest rate, so explore your options thoroughly before you sign up for one.
As an owner, it is foremost responsibility to rescue your company from the ditch if you have fallen into hard times. There is plenty of secured and unsecured Coronavirus start-up business loan with bad credit options and other alternative financing options means that you can use to help your trudge through the struggle.
However, remember that you plan well so you can repay the loan taken without hurting your credit score. And, if you are worried that your credit score won’t allow you to seek finance, fret not as many lenders provide fast cash or quick loans for small scale business needs.
Description: Is your business suffering from the global pandemic? Don’t worry and read on to know about the simplest finance options for your business.