The business world is tough, especially for start-ups and small to medium sized companies. It doesn’t take long to find yourself short on finances and your bank account on a slippery slope going from black to red. In some cases, all it takes is a late payment from a big customer that halts your cash flow, the loss of an important customer, or an unexpected bill you have to pay right away.
These problems don’t always have to mark the end of your business, but they often make it imperative to find a viable borrowing solution. There are many different options to choose from, and finding the right one for you can be daunting. It involves lot of research, and hours spent weighing the pros and cons and trying to balance your books.
If you’re struggling to know where to turn, here are a few options that you might want to consider:
Bank Overdrafts
Bank overdrafts are one of the best borrowing solutions open to you, and for business accounts, it’s often possible to negotiate an overdraft limit of between £5, 000 and 10,000. Interest is usually low compared to other borrowing options, and this makes it a great solution for most. The downside, however, is that those with a negative credit history will be very limited in terms of the overdraft facilities that are offered to them.
Credit Cards
For those who have maxed out their business overdrafts, a credit card is another option to consider. Most business cards will allow you to borrow between £5,000 and £10,000, and although there will be interest attached, this will be less than for some borrowing options. The fallout if you’re unable to pay is also limited. Unfortunately, however, many credit card lenders won’t consider you if your credit history is below par.
Loans
Perhaps the most popular borrowing option is loans. There are two main types to consider: secured and unsecured.
Secured loans are levied against an asset, usually your home or business. Although this makes them much easier to access than their unsecured counterparts, it also means that you stand to lose an awful lot if you can’t meet your repayments.
Unsecured loans don’t pose the same degree of risk. If you fail to meet repayments, you won’t chance losing your home, business or car, but the price for this privilege will be much higher interest rates, and more stringent credit checks to gain approval in the first place.
Pawnbrokers
If business borrowing options don’t pan out, you might want to consider borrowing in a more personal way. Pawnbrokers like H & T work by lending you money against an asset of your choice, which they can sell if you default. As the capital they lend is secured against this asset, credit checks are non-existent. The money is usually in your hand within 24 hours of first approaching a pawnbroker, and the debt can be paid off early if you’re able.
Could one of these borrowing options offer the perfect solution for your business?
