Are you struggling to meet your company’s financial needs? Perhaps it’s time to seek additional financial power from various business finance solutions available in the market. Although most businesses rely on sales as their primary capital source, they sometimes need more immediate finance solutions. For instance, the COVID-19 pandemic hit businesses hard, causing difficulties in their financial wellbeing.
Various business finance solutions are appropriate for different phases of business growth. Therefore, you should choose specific finance solutions depending on your business stage.
Are you new to business finances solutions? If yes, we’ve made this article specifically for you. Here, you will learn more about finance solutions, including why you need them and examples of finance solutions for business. By the end, you’ll have substantive know-how regarding the subject.
So, let start with the primary basics, shall we?
What are business finance solutions?
Business finance solutions are immediate funding solutions that support your financial needs by acquiring the needed assets or services without risking your property. Various finance solutions for businesses have different requirements that you must fulfill to qualify.
Why do you need business finance solutions?
Many reasons can trigger your need for additional business finances. Here are some primary reasons why you may seek help from business finance solutions:
1. Working capital
Having adequate working capital is an essential aspect of any organization’s financial health. Lacking sufficient working capital has significant negative effects on the company’s future. Since your business may be currently underperforming, you may lack adequate capital to fulfill your growth ambitions.
Don’t let your company’s vision fade or fail to exploit new opportunities due to a lack of adequate working capital. Various business finance solutions such as loans can help you address your short-term financial needs. At the same time, they provide the business with the finances it needs to develop. Besides, finance solutions for business can address the gap between your supplier your payments and customer orders, enabling it to meet its financial obligations.
According to a survey by the British Business Bank, in 2019, working capital was the leading reason behind business owners seeking funding from business finance solutions.
2. When you need to start a business
Are you stuck with how to get your business up and to run due to limited financial capability? Well, it’s time to consider external funding from various finance solutions. While several entrepreneurs prefer funding from personal savings, families, and friends, this contribution is rarely enough to propel it to profitability.
The last thing you’d like to experience is your business failing before establishing a name for itself. You can explore various finance solutions for business, including funding grants, crowdfunding, and bank loans to fund your startup business. What’s best about this option is that some loans come at very low-interest rates to support startups.
3. Asset purchase
For your business to achieve its strategic objectives, you’ll occasionally need to purchase assets like new vehicles or machinery. While sometimes you may have adequate funds to finance the asset purchase, other times you may lack the financial ability to do so.
An asset financing loan can help you acquire the needed assets to grow your business, regardless of your company’s current financial status. The main advantage of this option is that you spread out the costs associated with acquiring a costly new asset. The case is so because the fixed monthly loan repayment terms can range between 6 and 60 months.
You can use this repayment period to plan for your cash flow in advance, enabling you to exploit growth opportunities that come your way. Besides, you’ll acquire the required assets on time. Therefore, you can scale up your company’s productivity and effectiveness, allowing it to thrive despite facing competition.
4. Growth funding
Taking your company to the next level requires significant funding, especially if the anticipated growth magnitude is big. You may lack the adequate money to expand the business, according to the established business plan. To address this issue and achieve your business growth goals, you can consider business finance problems solutions available in the market.
Imagine you want to integrate a cloud backup solution to secure your data or an enterprise business solution to automate various organizational processes. Lack of adequate funds to incorporate such solutions into the business can lead to missed growth opportunities. Don’t let finance shortages impair the business’ success. Try various business finance solutions to get things done.
5. Debt restructuring
Did you know that you can use business finance solutions to restructure your organization’s debt? Well, yes, you can use finance solutions for businesses like a loan to consolidate your borrowings. Doing so will minimize the costs associated with multiple monthly repayments while enhancing your company’s financial manageability.
Besides, restructuring your company’s debts using local or multinational finance solutions reduces the number of monthly repayments you need to track. Instead of tracking repaying four or five loans monthly, you’ll only need to track and repay one. Simple as that.
Now that you have known when to seek finance solutions for business, let’s look at some of the options you have, shall we?
Top 6 business finance solutions you should consider
Here is a list of key local and multinational business finance solutions to consider should you need immediate funding for your business:
1. Venture capital
Among the main challenges that businesses face is the inability to raise sufficient capital to sustain their operations. Similarly, other business finance problems solutions like bank loans have strict criteria for application. As a result, they are unsuitable for various business entities such as small-scale enterprises, as they cannot meet such criteria.
Imagine applying for a loan and being denied because you don’t have a guarantor. This can be humiliating for you and your business as it will continue to face financial difficulties.
If you’re not in a position to qualify for a loan, then venture capital is an excellent option worth considering. Venture capital organizations provide capital in exchange for company equity. This business finance solution is ideal for startup businesses as it focuses primarily on its future prospect.
Venture capital firms can serve as business finance solutions and M&A advisors. The case is so because they provide financial and non-financial support, including managerial and technical expertise.
2. Asset-based financing
As the name suggests, you use the company’s assets as collateral in exchange for capital. When dealing with asset-based financing, you must be careful because you can end up losing your company’s assets if you fail to repay the loan.
Many asset-based finance solutions for businesses are funded against the accounts receivable and sometimes against the inventory. This case is because receivables are one the most liquid company assets. Lenders favor receivables because they self-liquidate with a short period. Besides, they are not vulnerable to issues such as physical damage or shrinkage.
Factoring is another form of asset-based lending, which involves buying the firm’s account receivables on a non-recourse basis.
Usually, asset-based financing is a suitable source of capital for firms with quick turnaround and where conventional bank loans are unavailable. Alternatively, it can work best for rapidly growing and new companies with high growth levels.
3. Long-term debts
These finance solutions for business are among the top options that a firm should pursue. Mostly, they come in the form of loans, and to qualify, you must meet particular criteria. A long-term debt comes with interest, and you’re required to repay it in specified installments over the entire loan’s lifespan.
You can get long-term debt business finance solutions from:
- Private lenders
- Government-sponsored loan programs
- Commercial banks and
- Small enterprise investment companies.
4. Lines of credit
This business finance solution provides funds to businesses for short-term use, like expanding inventory and purchasing equipment. As the company generates funds within the business cycle, the provided loan is repaid.
You can think of it as a credit card. The lender gives you access to a specific amount of money and makes regular payments. You can withdraw it as needs arise. The financier charges you interest based on the amount withdrawn.
However, it’s worth noting that interests associated with lines of credit finance solutions for business are higher than usual prime interest rates.
5. Loan workouts
As the name suggests working out issues, loan workout is a form of business finance solution that involves the most agreeable repayment plan. Loan workouts involve maintaining constant communication with your lender, developing a revised repayment schedule, and creating the workout team.
The team comprises of lender’s representatives, legal counsel, and the company’s executives. Financial experts who specialize in this business finance solution coordinate the lender, the company (borrower) to address issues as they arise.
6. Letters of credit
These business finance solutions involve the bank acting as a guarantor for a particular obligation. Should the borrower fail to honor the repayment, the bank is held accountable. This funding solution is useful to new businesses whose creditworthiness is not assured.
The bank issues a letter of credit as a way to assuring the vendor of their payment. Although the bank won’t pay any funds, it will allow you to get the needed equipment or service from your vendor on credit.
How much do business finance solutions managers make?
Business solutions manager finance salary ranges between $66,226 and $95,249, plus bonuses.
Whether you’re new or have been operating business for some time, you’re bound to encounter situations that will require an immediate business finance solution. Don’t let the bank’s strict loan approval criteria stop you from exploiting new opportunities or addressing emerging business needs due to a lack of enough funds. Find alternative finance solutions for businesses with flexible terms and mild credit requirements thaht can be redesigned to meet your individual business needs.
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