Whether it’s to survive shortfalls or accelerate growth, access to capital can be critical to small business success. Access to capital can help small businesses 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.
Securing capital is something that comes in time with virtually every business, whether it's in the initial exhilarating stages of transforming an idea into a company or later on, once operations begin to normalize. Generating the amount of liquid cash necessary to scale appropriately, build inventory, or expand marketing efforts can be a challenge for businesses of any size, making additional cash flow a significant benefit.
Unfortunately, for many entrepreneurs, borrowing money feels like throwing in the towel and admitting defeat. In reality, securing capital can be what it takes to motivate growth and truly seize the proverbial day.
Access to capital can help small businesses ensure a positive cash flow by securing financing at better terms and getting that financing when it's needed to take advantage of immediate business opportunities. Conversely, businesses with poor credit ratings may face higher credit card and interest rates from lenders. Indeed, insufficient or delayed financing is the second-most-common reason for business failure, reports the SBA.
Access to capital can also help small businesses avoid cash shortfalls, whether they’re due to slow business, natural disasters or daily operations and to stay afloat when times are tough. Enough income to sustain a company on a day to day basis is an important part of keeping a business going, but in many cases, it's not enough. Appropriate cash flow goes beyond the bare minimum; there's significant value in having the funds available to take advantage of special opportunities, whether that means purchasing additional inventory for a special purchase order, or getting in on the ground floor of a profitable investment. With capital, every opportunity is available.
Small businesses should perform periodic checks of their credit reports and scores. Any errors should be challenged immediately with the appropriate credit bureau, reports Intuit’s Small Business Blog.
Companies with less-than-perfect credit aren't necessarily blown out of the water. If a credit report contains an issue that is factually correct but negative, business owners can try negotiating directly with the creditor for a lower balance, an extended repayment schedule or removal of the item in question in exchange for immediate payment in full.
Small-business owners should also analyze their credit reports for information that can be seen as credit weaknesses by potential lenders, such as high balances relative to credit limits and too many open accounts.
Whether it’s to help a company weather tough economic situations or to take advantage of growth opportunities when times are good, access to capital can be a critical component of any small-business success.
When handled correctly, a business loan can be a very personalized, carefully crafted undertaking. An all-purpose, one size fits all loan is only an asset in very particular circumstances, but a customized lending process has the ability to create a solution that is very specific to your needs. With the ability to evaluate specific requirements, from loan terms to principal amount, interest rate to repayment schedules, a business loan can open doors for you that were previously closed and locked.
In some cases, access to capital is a great way to take advantage of new opportunities. In others, however, it can be a good way to pull a struggling company out of a pit of poor circumstances. Despite the potential for risk, capital can be the saving grace when trouble comes to call, providing the means to bridge the gap between failure and success. A few extra dollars today may mean an empire tomorrow, and can be the necessary protection against closing up for good.
A business loan, whether for a few thousand dollars or a few million, can make previously unavailable opportunities obtainable, providing a customized solution in a time of need and keeping the lights on even when the going gets rough. With ready access to business capital, the possibilities are literally limitless, offering the assets you need to promote a positive trajectory and inspire healthy growth.