Understanding Your Commercial Financing Options

Before you start taking the time to research all the commercial financing options out there, first think about what your business actually needs. Do you need quick cash for an opportunity that won’t last long? Maybe you’re thinking about opening a storefront and need capital for building at a certain location. Or, maybe you just need something to fall back on in case of emergencies. Once you’ve figured out the root of why you need financing, it can be easier to determine the right option for you.

Below, we’ve broken down some of the most popular commercial financing options out there. While it might be easy to choose from a list like this one, it’s always best to have your lender advise you on your specific needs!

Lines of Credit: Similar to a credit card in that you can borrow up to a certain amount but must repay it (with interest) before being able to pull out more against your limit. Typically, this option will have a higher interest rate although high business credit can qualify you for lower ones!

Microloans: Microloans are great for startups and need a smaller amount of financing (lower than $50,000 usually). Microloans can come through the SBA, traditional banks, and even some non-profits.

Working Capital Loans: In the short term, working capital loans can be a huge help for businesses needing help to cover their everyday expenses. Businesses that are seasonal often use this type of loan to settle payroll, monthly debt payments, and rent during their off-season.

Traditional Bank Loans: These are the typical loans you think of when searching for commercial financing. These loans offer a wide range of options and flexibility that many businesses turn to when they are in need of capital.

Merchant Cash Advances: Quite possibly one of the fastest financing options out there, merchant cash advances analyze how much money on average the credit card transactions a business receives in a day and gives them the future capital early. In essence, the business is “selling” parts of their potential credit card sales in order to get the money now.

Cash Flow Loans: Rather than using collateral like in typical loans, cash flow loans predict expected profits and possible liquidated assets in order to determine how much risk there is. This is not a choice for startups, as they can’t usually predict their cash flow with much credibility.

Finding the right loan for your business usually isn’t a decision you make in a day – especially when you don’t have someone there to guide you through the process. Let us help you find the right option for your business (whether you’re a 1-person shop or a 7,000 employee company)!