Acquiring quick and flexible finance is one of the biggest issues that business owners face today. Conventional debt providers fail to factor in the equity appeal and the discrepancy in cash flow, while the equity financing route is reserved by size, is time-consuming, and may take management attention off the central business activities.
Flexible capital is crucial here because it is a source of funding that helps businesses achieve their fund-raising goals by bridging the gap between conventional debt and equity, thus putting minimum pressure on the cash flows. It not only helps lenders to assign value to thriving businesses but also allows borrowers with financing needs to avoid any significant decrease of control at an early stage.
At the same time, it is relatively cheaper than equity funding and provides a unified platform for borrowers with a system of financial needs to meet lenders looking for productive opportunities to position their capital.
Here as some flexible sources of fund that help business management –
Traditional Bank Fund
For getting a fund for the working capital, the traditional method of getting funds from the bank is the first thing that comes to management minds. This is because this method is the oldest and most trusted. Banking systems are evolving with time, they have started offering plans for small businesses too.
Enquiring a bank for knowing their plans before finalizing, is the right way to get the funds so that there is an idea of how long it will be needed to pay back the amount borrowed.
Merchant Cash Advances
Merchant cash advances are a short-term business fund provided by MCA companies in return for a percentage of future credit or debit sales.
It is a flexible funding method that provides fast access to the fund. MCA gives repayment flexibility and the approval rate is greater.
Business Line of Credit
A business line of credit is a flexible fund that provides an assured amount of money that can be acquired in a short period. It requires a business to give some assets or collateral to secure the capital. It is a valuable financial tool that can help in accessing capital quickly and provide a flexible repayment schedule.
Hence, a Business line of credit helps in handling cash flow gaps, address crisis, and provides more working capital.
Through invoice financing, business owners can borrow money against the amounts pending from customers. It is a quick and flexible business financing solution and it focuses on business growth. With invoice financing, there will be no risk of delayed payments and default payments.
Invoice financing helps in settling major financing issues without burdening the business management with debt.
SBA stands for Small Business Administration. It has come forward to help all types of businesses grow by offering them various funding options. One such option is PPP, which is the Paycheck Protection Program. It provides low-interest funds for working capital.
Even if the business is in the initial stage of implementation, business management can apply for the funding. As SBA funding programs do not follow traditional banking methods, the chances of getting faster access to the capital are more.
Advantages Of Alternative Funding
- The application process is easy. It does not require a lot of paperwork. Because of this quick funding is possible. Also, the chances of approval are greater.
- Alternative funding options are flexible. It can be repaid according to the convenience. It does not pressurize as the traditional method does.
- There are multiple funding options available. There is access to any fund without experiencing difficulty.
Flexible capital can help companies achieve diversified objectives at different periods in their business life cycle :
When a business is financially flexible, the company can make swift decisions on how to act on circumstances that demand a quick response. In certain industries, this can mean the gap between grasping market share and becoming obsolete.
Companies often pursue present opportunities due to the unavailability of financial flexibility at the cost of future growth and sustainability. When there is flexibility, businesses will not have to pledge the future away.
Firms with financial flexibility do not have to waste their time and energy in thinking about ways to finance major business decisions. Instead, prioritization can lead towards creativity and execution.
Financial flexibility gives businesses the potential to adapt, pivot, and evolve with ease. There is quite less grinding involved in the process, and businesses can do more with few.
When finances are rigid and there are questions about how certain expenses and projects will be financed, business owners often feel like they are being tossed around.
But when a firm is financially flexible, there is a lot less irregularity. A sense of peacefulness seeps into the business and everyone is at peace.