Getting a Small Business Loan in Detroit has never been easier, well for those local business owners who have contact LVRG Funding at least. Whether it’s to survive cash shortfalls or accelerate growth, access to capital can be critical to small business success. Access to capital can help small businesses in Detroit grow by giving them the means to purchase new equipment or supplies, upgrade technology and expand facilities, all of which can also lead to increased hiring. And managing that business capital in a positive way impacts the terms and availability of the financing available to fund that growth.
As a local small business funding company and being active in Detroit’s small business community, we are hearing that things are slow across the board. Some of Detroit’s coffee shops, restaurants, craft breweries and retail boutiques, as well as a few shops around Detroit's Eastern Market and New Center areas, have been experiencing a few slow months. In fact, we are hearing the same from small business owners across the country, so it's not just here by any means. Perhaps it’s the weather, uncertainty in the economy, waiting on the inauguration, or a combination of all. Nevertheless, Detroit small business owners must get through the next few months and do everything they can to avoid a cash flow crunch. The following are obtainable, reliable and quick small business loan options that could enable stability and even growth, in preparation for the Spring.
A small business line of credit (LOC) allows Detroit small business owners to draw against a lender-specified amount of financing on an as-needed basis. The advantage of a business credit line is that you only pay interest on the funds you actually draw, so you’re not stuck paying interest on capital you don’t have an immediate use for. Here are a few small business line of credit options to consider:
1. Traditional line of credit:
The traditional line of credit is typically meant for experienced business owners with proven business models. Which makes sense since the credit maximums are sizable, the rates are lower, and the requirements demand higher credit scores and annual revenue reporting. If you’re a business owner taking out a line of credit, you’ll be spending that flexible cash on seasonal business expenses, payroll and other operational costs, insurance against emergencies and for sudden opportunities. In other words, as a capital cushion. It’s there for you when you need it.
2. Short-term line of credit:
The difference between a short-term line of credit and a traditional line of credit is more or less the same as the difference between your typical short-term loan and conventional bank or longer-term online loan Therefore, a short-term line of credit has a higher interest rate, lower credit maximum, faster turnaround time and looser application requirements. Unlike the traditional line of credit, the short-term line of credit is generally offered by alternative lenders rather than by banks. The point isn’t that one is better or worse, they appeal to different groups of business owners. Those with lower credit scores, smaller annual revenues, or newer businesses might only qualify for a short-term line of credit. And although the short-term line of credit tends to be more expensive, its value lies in giving younger small businesses the opportunity to maintain a flexible pool of capital. A small business line of credit provides flexibility that a regular business loan doesn’t. With a small business line of credit, you can borrow up to $100,000 and pay interest only on the money borrowed. You then draw and repay funds as you wish, as long as you don’t exceed your credit limit. Need to manage cash flow? Buy inventory? Pay for a surprise expense? Then a business line of credit makes sense.
3. Invoice-backed line of credit:
The basic idea behind invoice financing (also called accounts receivable financing) is that, sometimes, customers take a long time to pay you back -- but you might not be able to wait. Instead of relying on short-term loans to cover operating costs, or digging into your savings, you could just get those invoices paid right away -- although you’ll have to shoulder the costs of that speed and efficiency. An invoice-backed line of credit follows the same logic. The value of your invoices determines your credit maximum, and you can draw capital as needed instead of relying on your customers to pay on time. And as your invoices increase, you’ll typically have access to more cash from the line of credit as well.
Is a line of credit loan a good fit for my business?
While it’s ideal to have savings to help your business weather storms, the next best thing is to apply for a line of credit. Business credit lines were designed to help you meet short-term cash needs, such as purchasing supplies or additional inventory or covering operating expenses. Essentially, a business line of credit can help small businesses thrive and grow. A business line of credit is a good option to offset fluctuations in working capital when your expenses stay constant. A line of credit will give you access to funds to continue to pay bills on time or purchase additional inventory if needed. The advantage of a line of credit over a regular business loan is that interest is only charged on the funds you actually use. Additionally, your business can draw on the line of credit at any time that you need.
There are numerous reasons a business owner might choose to borrow, but here are some situations where a short-term cash flow loan could make the most sense:
Overcoming a short-term seasonal cash flow bump: Many seasonal businesses require a little extra capital to meet expenses during a down time or before the busy season starts.
Unexpected expenses: It’s not uncommon for businesses to experience unexpected expenses like a major plumbing problem or other maintenance issue they might not have the cash flow to cover.
New project start-up costs: Ramping up for a new project or a new customer sometimes requires additional resources that might exceed a business’ ability to cover with cash flow, but will be recouped in 60 or 90 days.
An opportunity to purchase inventory at a steep discount: A temporary cash flow loan is a good way to take advantage of an opportunity to purchase inventory that has the potential to increase profits.
Emergency repairs to business-critical equipment: When equipment necessary to the operation of your business fails, it likely doesn’t make sense to wait several weeks to start repairs. A temporary cash flow loan can be a good way to access capital to start those repairs right away.
We understand the cash flow limitations that small business owners sometimes experience, including the unique challenges faced by seasonal business owners. We make temporary cash flow loans with the goal of helping small businesses grow. We offer small business lines of credit and cash flow loans to Detroit small business that are based upon the overall health of the business, rather than solely your personal credit score. Headquartered in Detroit's Historic Ford Building, LVRG Funding is a local funding firm dedicated to helping the local small business community thrive and grow. With a dedication to our clientele and a reputation for excellence, you'll understand why LVRG is such a respected member of Detroit's small business community. Give us a call today (855) 998-LVRG, we're here to help!