64% of small business owners say they expect profits to increase this year, Nerd Wallet reveals. If you’re a small business owner looking to grow your operations, finance options can provide the capital you need to improve output and efficiency, without putting unnecessary stress on your cash flow. By taking time to compare and contrast available financing options, you can choose the right one for your situation.
Let’s face it: business equipment doesn’t come cheap, while even smaller, related expenditures (like regular maintenance) don’t take long to add up. Fortunately, equipment financing can help you finance the cost of new equipment, whether it be new vehicles, furniture, technology, or machinery, for example. Equipment financing can help you preserve your cash flow to use on daily operations as needed, while also offering attractive tax advantages. So, that means, if your purchase qualifies, you’ll be able to write it off – currently businesses can now expense up to $1,080,000 on new or used equipment. Usually, to qualify for this loan, you’ll need to have been in business for at least one year, and generate an annual profit of $100,000 or more. You’ll also need a minimum credit score of 550-600.
Business credit cards
By providing you with instant access to finance, business credit cards are an easy and convenient way to facilitate business growth. It’s usually easier to get approved for this type of card than it is a business loan, and they’re also a great way to start building company credit – therefore paving the way for you to borrow more money at lower interest rates in the future. Business credit cards also typically offer attractive perks, so it’s important to compare and contrast your options to find the card best suited to your needs. For example, some points systems will provide you with a certain number of points for every dollar spent; you can then trade in these points for rewards like flights, restaurants, or shopping gift cards.
Small business loan
A small business loan provides you with a lump sum to use as needed – the maximum amount available to borrow tends to be $50,000. You’ll then need to repay the loan at the agreed interest rate, which usually ranges between 7%-30%. Repayment terms with small business loans tend to be longer than other financing options, which can make repayment easier to manage. Keep in mind, however, small business loans aren’t always easy to qualify for, particularly if your business lacks a solid credit history. This type of loan also requires collateral (an asset you pledge as security for the loan). So, if your business is lacking in valuable assets, you may not be likely to qualify, and will be better off looking at different options.
Business finance options can help facilitate your growth strategy without impacting your cash flow. Equipment financing, credit cards, and small business loans, in particular, are some of the most useful options available.