Running a business is no easy task. The Covid-19 pandemic has made it even harder for businesses to make a profit. There are many highs and lows, and once in a while, you may need to inject money urgently into the business. There are so many different ways one can get money for the business if you have the time. If you are thinking, ‘I need money today,’ that’s a whole other situation. In this article, we share some ways through which you can get emergency financing for your business.
1. Consider Factoring
Factoring involves selling some of your receivables at a discount to get some money in advance. This is mainly common in the fashion industry or in companies whose credit score is not appealing to banks. This method can, however, be expensive. When selling receivables, you will part away with a percentage of the total income as a fee.
2. Bank Loans
Getting a loan can be hard, especially if your business is not doing very well. Lending rules are getting tougher by the day. However, some banks have set aside funds that they give out as a loan to a business or small business grants. You should find out if your bank offers such loans and apply. This can be one way of getting financing for your business if you need it urgently.
3. Use a credit card
This can be risky, but what if you need money the same day? This is one way of getting funding as long as you know you will pay back on time. Defaulting on your payments can easily mess up your credit score. If you use your credit card wisely, you will be able to get some help once in a while.
4. What of that 401k fund?
The 401k funds you have accumulated over the years can be very tempting if you really need some money. Luckily for you, there are provisions in the tax code that allow you to get some of it by following the set-out steps. You might need to get the help of a lawyer to process this.
5. Crowdfunding
There are several crowdfunding sites for entrepreneurs like kickstarter.com. This is one way of raising money if you really have no other option. You can set a target and time limit. Friends, family, and strangers like the ideas you are trying to fund will chip in and donate. This is, however, not a means of raising money for your business every other day. Kickstarter specifically targets creativity.
6. Raise money from friends and family
If you have some good friends, then you might need to make a few calls, and you’ll have the money you need. It is important to have a clear plan of how you intend to invest the money and how and when you plan to pay back. This way, your family and friends can gain more trust in you and lend you the money.
7. Pledge some of your earnings in the future
You can offer a cut of the profits to potential investors to encourage them to invest in your business. You can give up a percentage of the business and get a partner who is willing to join you to fund what you urgently need and get some shares in the business in exchange for the funding.
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