According to the US Small Business Administration there are already 28.8 million small businesses in America, with millions of new businesses started each and every single year.
Accounting for 99.7% of all business in the US, it’s easy to see that these kinds of businesses (responsible for employing 56.8 million people) are the lifeblood and driving force of our American economy. The dream of entrepreneurship helps make our collective American Dream possible – but that’s not to suggest that being a small business owner is without risk, danger, or plenty of challenges.
In fact, a little over 33% of all small businesses are going to fold up shop permanently after just two years in operation. Over five years, 50% of all small businesses are going to be closed forever – and only one third of all small businesses are going to make it to their 10 year anniversary.
There are a lot of reasons behind this skyhigh rate of failure, but 82% of all businesses report that cash flow and financing issues play at least some role in the collapse of their business. 55% of all businesses report that it was the number one issue that kept them from succeeding.
Thankfully though, in the decade plus following the Great Recession when it was next to impossible to get financing for a small business, new options for small business owners have been created in the financial industry – options intended to help entrepreneurs build and grow the businesses of their dreams.line
Below we highlight seven of the best ways you can fund your business in 2020 (and beyond), giving yourself every shot at creating the financial future you’ve always dreamed of, the financial future that you deserve!
Top Seven Ways to Fund Your Business in 2020
Business Lines of Credit
One of the most flexible and versatile sources of business funding and financing in 2020, business lines of credit can give you almost immediate access to the cash and capital you need to take advantage of business opportunities, to grow your business, and to invest in your success.
Best for small businesses that have somewhat unpredictable or seasonal credit needs, particularly businesses that would like a pool of credit they could draw from as needed, it’s possible to get approved for these kinds of financing packages in as little as 30 minutes – all while getting up to $250,000 in cash and capital to use as entrepreneurs see fit.
Equipment financing is another nontraditional small business financing option entrepreneurs will want to consider.
Specifically designed to help new businesses get their hands on the equipment and hardware they need to conduct business to expand their base of operations, and to take advantage of new opportunities, these kinds of loans use the equipment itself as collateral to help make the approval process move much faster.
There’s no limit to the amount of cash and capital that can be taken advantage of with equipment financing (because the equipment itself serves to back the loan), and the application process usually takes between 24 and 48 hours to get the green light.
Small Business Administration (SBA) loans are incredibly popular – and for good reason.
Giving entrepreneurs a government secured loan through traditional lending organizations, when you have been approved for SBA financing packages (a process that can take up to two weeks) you’ll find that almost every reputable lender in the financing industry is more than happy to extend you the cash and capital you are looking for.
On the flip side of things, it can take a little bit of time to actually get your hands on the funding that you were hoping for. It’s not at all uncommon for it to take up to 90 days for you to gain access to funding you have already been approved for, though why it’s possible to draw up to $5 million in SBA loans most people are willing to wait the three months.
Account Receivable Financing
Sometimes called “invoice financing”, this nontraditional small business financing opportunity essentially puts up your Accounts Receivable as collateral to secure the loans that you are hoping to take advantage of.
Most nontraditional lenders will allow you to get up to 90% of your outstanding Accounts Receivables in the form of lending so long as you put these assets up as collateral, giving you plenty of opportunity to sort of use your own business success to fund future success and opportunities that might have been tough to really make the most of otherwise.
For one reason or another, a lot of entrepreneurs overlook taking advantage of business credit cards when they are hoping to finance their business.
Often times one of the most affordable (and certainly the easiest to take advantage of) financing option out there right now, the only obstacle that entrepreneurs will have to clear here is their personal or business credit score/history. If they have less than picture-perfect credit the odds are pretty good that they’ll have a difficult time making the most of all that these kinds of credit cards have to offer.
With a bit of credit card arbitrage approaches, though, entrepreneurs cannot only get the financing they need for their business but earn rewards and perks with the right cards, too.
As a general rule, the sooner you need cash and capital with term loans the more you’re going to have to pay as far as interest is concerned – but there aren’t a lot of other options out there that can get cash in your hands ASAP, especially when you need up to $500,000.
You can get approval for these kinds of loans inside of 48 to 72 hours, funding in your bank account inside of seven days, and can usually lock in friendly repayment terms for anywhere between one year and five years.
Merchant Cash Advances
Another of the more popular nontraditional forms of business financing available to take advantage of these days, Merchant Cash Advances (MCAs) give you an opportunity to “sell” future sales to gain access to the cash and capital you need right now – repaying of these MCA financing packages with a portion of every sale that your business makes until you’ve pay back the principal and all interest charges.
These kinds of financing packages can be very easy to take advantage of because they are secured with your sales (provided you can prove cash flow), and you can usually get an answer about your approval inside of 24 hours – with funding of up to $1 million inside of 24 hours, too.