Whether you need quick access to cash for a useful business investment or you're stuck waiting for a payment, having quick access to funding for your business can take the pressure off. If you notice that you're constantly on the hunt for emergency funding, it may make sense to set up a line of credit for future use. The tips below can help you out now.
Renegotiate The Terms Of Existing Debt
If you have a strong relationship with a vendor, you may be able to renegotiate the terms of your payments to them. If you are net 30, ask for one month's grace to pay net 60. Another option is to pay a small interest payment for 30 days so you can apply those funds to your emergency need.
The key to such flexibility is, of course, a positive relationship and consistent payments most of the time. The risk of falling behind should be avoided at all costs. If convenient, make this full payment via courier if necessary. If you are doing a bank-to-bank transfer, try to get the payment applied 5 days before the final due date to avoid putting any extra pressure on your vendor.
Another option is to set up a minimum payment plan with a balloon payout at the end of these extended terms. If you find that your emergency is going to cause you to go past the extension, do your best to make at least a partial payment and accept any fees required of you.
Access Personal Credit
In an extreme emergency, accessing your personal credit may be necessary. If you've been bootstrapping your business and have paid off the personal debts that went into setting up the business, those lines of credit should still be available. Do take care to avoid taking on secured debt that requires you to risk your personal belongings to cover a business expense; you don't want to lose your home in an effort to save your business.
If you know that your personal credit may be needed for a specific purchase, do your best to get something back out of the deal. For example, you may need to make a $1,000 purchase for your business to cover the cost of a new laptop or manufacturing tool. Use a credit card that will provide you with
● a cashback welcome bonus
● points for a retail establishment that you use regularly
● miles on an airline, train, or rental car
There are many cards offering welcome bonuses if a large purchase is made within a specific term after getting the card. It may be a good idea to keep an eye out for these offers and get into a regular application habit.
Borrow Hard Money For The Short Term
There are many investors who have little desire to put more money into the stock market. If you have a funding emergency that is caused by a delay and you're certain of the payout, getting access to California hard money loans or loans in other states you do business in may be an ideal choice.
Like the first example, hard money loans get easier as the relationship gets stronger. Once a lender knows that you're good for it, your next hard money loan will be faster. Do be aware that the interest rate on these loans will be higher than that offered by your bank. The terms may be shorter. However, if you need money fast and are able to pay off the debt either with a refinance or a cash payout once you make your money out of the deal, a hard-money relationship can be quite lucrative for all involved.
Use Invoice Factoring
Like hard money borrowing, getting extra cash via invoice factoring requires a strong relationship with the lender. If you've got to wait up to 90 days for an invoice payout and you need the money now, you can borrow against that 90-day payout with invoice factoring. In this case, the eventual payout will go to your lender, along with any fees they require.
Keeping your business going requires access to both long-term and short-term funding.
Emergency financing can be for a positive purchase or a negative shortfall. Do be prepared for fees that may crop up. Carefully consider strengthening your relationship with a local bank for low-cost lending in the future.
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