It becomes really difficult to maintain the right balance between the current assets and current liabilities of your business as a new business owner.
In case this balance is affected due to any external reasons, then your business may face a difficult situation. Such a situation often leads to working capital deficits and you may face trouble meeting your daily expenses for your business.
This is the point when you need the right lenders who can save you from being plunged into serious crises.
Therefore we have listed some options for getting working capital for your new business.
It is possible to take up a personal loan and utilise it for the purposes of your business, however, it is often more useful to rather opt for a specialised loan designed to cater to the needs of your specific business.
A business loan is one of the most popular and effective means of raising working capital for a new business from a bank or a financial institution.
A business loan is a type of lending agreement which is made between the lender and the business owner.
According to this agreement, the lender agrees to give out a fixed amount of money to the business owner as long as the latter repays it, with some added interest, according to the said schedule.
The duration for which the loan is availed is referred to as its tenure and the regular amounts paid back by the borrower are known as equated monthly instalments or EMIs.
For instance, some business loans are directed towards helping you initiate a small business, while others are intended specifically for purchasing new equipment or machinery.
Get a Collateral free loan for working capital.
BUSINESS LINE OF CREDIT
A business line of credit is described as a combination of regular loans and business credit cards.
This type of loan is offered by banks and financial institutions that provide access to a specific amount of capital to you as a business owner.
The business owners can utilise this working capital loan as and when required to meet the needs of your new business and then repay either immediately or over a period of time.
As soon as the offered working capital loan is borrowed, the interest rate is applied to the amount.
The credit scores of the borrower decide a business line of credit that requires approval of the borrower from the lender. These are similar to how regular business loans and business credit cards work.
The business line of credit works exactly like a business loan in terms of requirements for credit score, credit history and collateral.
BUSINESS CREDIT CARDS
Business credit cards are good for keeping personal and professional expenses apart.
It is also known as corporate credit cards. These forms of credit cards are specifically assigned to a business for working capital and are not given to an individual. These are provided in order to meet the regular financial needs of the business.
In case the working capital required is not substantial, your business credit card can easily help you fulfil any financial gaps you might be experiencing without having to spend time waiting for approval.
If you have a new small business, having a good business credit card can also help your business build credit over time and improve your loan approval chances in the near future.
Angel investors are people with high net worth who are looking to provide financial assistance to new ventures and businesses.
Such financial assistance is generally offered in exchange for a share of ownership in the business, basically in the form of equity.
Depending on the type of investment and participation they look for, angel investors can either provide a one-time financial backing for working capital or continue to invest and support the new business in various ways.
FRIENDS AND FAMILY
Taking a loan for working capital as a new business owner from close friends or family members can have its obvious upsides.
You can get a quick loan for your working capital very easily from a friend.
It also has the advantage of sidelining the process of credit approval for the working capital.
But, involving family members and friends in matters of business can often prove to be tricky and may complicate things ahead.
Taking a loan from friends and family should be considered a last resort for a new business owner.
If you are worried about availing a collateral free loan, get advice from our experts.