Having a small business is a very fulfilling achievement. Budding entrepreneurs get to achieve their dream and have the opportunity to grow into big-time companies. Everyone begins small, and it is through these small businesses that we have the products and services we enjoy today. But not every small business will flourish quickly. While many inspiring businessmen have raved about their small businesses, what many forget to mention are the exact challenges they faced. Budding entrepreneurs are not promised only minor challenges in their business. They will go through countless of challenges each day, battling it out. You may get up, so long as you fight for your business and do what it takes to let it grow! But what is one of the most common problems beginners would face? The answer: Small Business Financing. Gaining a capital and profit may be a bit of a challenge for those who haven’t created a name for themselves… Yet.
It can be difficult to gain small business financing, especially if you have no connections or created a name for yourself. Because of that, we show you some reasons why you may be rejected for loans and how you can remedy that.
Reality of Small Businesses
While small businesses do have their promise and opportunity to flourish, the chances are slim. In reality, three out of ten small businesses find it difficult to reduce operating costs. A quarter of small businesses find it difficult to plan for unexpected or emergency expenses as well. There are 20 percent of small businesses that have already considered shutting down, with the main reason being their lack of profit or growth.
These are the main reasons why more than half of the small businesses who were surveyed by the Small Business American Dream Gap Report have had to apply for small business financing. They have went for loans or credit lines to stay afloat, with one out of four businesses looking for loans more than once! 20% have been turned down, while 45% of businesses denied a loan have been rejected more than once! What makes it frustrating is the fact that about 23% of these surveyed businesses have no idea why they were denied of small business financing.
Because of the lack of small business funding, 26% of these businesses have avoided hiring or expanding. As a result, they end up using their own personal savings and credit cards just to cover expenses and let their business stay afloat. Some have even relied on family and friends. Unfortunately, only 36% of those looking for small business funding have received it.
Why Your Bank Turned Down Your Small Business Financing
Wondering why you can’t get funding for your small business? It all boils down to your business credit score. It is not because it’s in the negative, but because not many entrepreneurs are knowledgeable on the matter. Around 45% of entrepreneurs who were surveyed had no idea they had a business credit score, and 72% of them don’t know where to search on it. It doesn’t matter, though, as 8 out of 10 businesses wouldn’t know how to read their score in the first place.
This is why it’s best to learn about a business credit score to obtain small business funding easily. Many businesses end up breaking it without knowing they do. It usually begins by maxing out their personal credit because they believe there is no other alternative. While it will help the business remain afloat for now, it will end up hurting their chances of getting small business funding from banks in the future.
The Solution: Small Business Factoring
To get good loans and funding for your business, you need a good credit score. In order for you to do that, you must avoid going over your personal and business credit! If you’re in a jam and need the funds as soon as possible, then this is where invoice factoring comes along.
What you need to do is to sell your invoices that are “slow” to collect. If you need the money as soon as possible but have sure yet slow-paying clients, then it invoice funding is a way to get the cash you need without fail. What you need to do is to sell your invoice at less of the full amount to a factoring company. Before you will be able to successfully transact with the company, they will review the customer’s credit score beforehand to see if he is sure to pay his accounts.
Once the customer is accepted by the company, you will send in the invoice to the company after the transaction has been completed. Carter Funding, the invoice factoring company, will then pay you 80% of the invoice. After the customer has fully paid, you will receive the remaining 20%, less a small fee. It’s that quick and will help you get the cash you need to keep your business running smoothly.
How to Begin With Factoring Services
“Selling” your invoices to any invoice factoring company has a process and it depends on the company you work with. But generally, all you need to do is to submit a complete application and the requirements that the factoring company may ask of you. As long as there are no issues and your clients have a good credit score, then you’ll be able to complete the transaction smoothly.
In a Nutshell
Small businesses may have trouble getting the cash they need from bank loans and credit. It isn’t great for your business credit score, either. That’s why it’s best to look for alternative ways to get your cash without the need to borrow or wait for slow-paying clients. With factoring companies, you will take advantage of the faster cash flow, all without going into debt.
If you have questions or would like more information, please contact Carter Funding at 1-888-232-8610. We hope this article has helped you solve the problem of your small business’ funding!