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Three Facts That Will Help You Finance Your Company, the Right Way

By on October 18, 2013

How to get a loan for a small business

Did you know that there are 28 million small businesses in the U.S.? Out of these businesses, a third rely on credit for financing. It’s no secret that many companies often need help with accounts receivable financing. Strong financial management helps businesses stay afloat, and keeps bankruptcy and other monetary woes at bay. It’s worth paying attention to, considering that 44% of startups fail after three years. What else do you need to know? Here are three facts.

What is Accounts Receivable Financing?

What is accounts receivable financing, you might ask? This is when a company uses money owed by its customers as collateral for financial agreements, or a type of loan. They then receive an amount that is equivalent to a reduced value of the receivables. This helps out companies who are stuck waiting for their receivables and are having trouble focusing on current business activities because of it. Basically, it’s a risk transference for the company, financially speaking.

2. What to Look Out for When it Comes to Easy Business Loans

When you receive loans, you need to be wary of the multiple ways banks or private creditors might try to take advantage of you. For example, double dipping is a common problem with cash advances and alternative financing. These funding companies will force you to refinance your prior balance in order to get an extended loan; without realizing it, many businesses end up doubling the rate of interest they are paying, costing small businesses an average of about $5,000 at each renewal.

3. What Sort of Small Business Programs Should You Look For?

If you need financial help, look for a funding company that specializes in, and has a positive track record with small business lending. Look for companies that emphasized customized solutions for the specific needs of your business, rather than cookie-cutter fixes that are likely to be unsustainable past the short term. In other words, you want someone who actually seems invested in helping you build your business into a successful enterprise.

What would you recommend to individuals wondering how to get small business loans?

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