Essentially, with invoice financing , you borrow against unpaid invoices. Once the invoices are paid, you pay back your loan with interest. Another option is invoice factoring, which involves selling those unpaid invoices to a lender, who will then be responsible for collecting the payments.
SBA Loans
If you have good credit-both business and personal-you might be able to qualify for a low-interest rate SBA loan to help you with your working capital needs. Because the loans are guaranteed by the Small Business Administration , they tend to pose less risk to lenders. SBA small business loans are one of the most affordable ways to secure business financing.
However, there are two big catches when it comes to SBA loans. First, you’ll need to qualify for the loan, and the process of doing so isn’t exactly easy. In addition to strict business and personal credit score requirements, you’ll need to satisfy a host of other lender criteria as well. Additionally, if you need access to funding in a hurry, an SBA loan might not be the right choice. The tedious application process on these loans often takes 60-90 days.
But, if you’re not in a huge rush and you believe you may be able to satisfy SBA loan requirements, there’s no doubt that an SBA loan is a great financial product. You can seek out SBA loans from any of the following:
- Traditional financial institutions like banks and credit unions
- SmartBiz
Interested in learning what it takes to actually qualify for a secured or unsecured loan from the SBA? This step-by-step guide may help.
Working Capital Loans for Startups
Startup companies in particular can be vulnerable to cash flow problems, in large part because it often takes a new business some time to start generating sufficient cash flow to cover expenses. Working capital business loans can be a great tool to help startups navigate this challenging time.
However, your funding choices as a startup (and most likely one with little to no credit history) can often be limited.
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