Business Loans and Alternative Financing

When a business grows it consumes cash. At one time or another, a business owners will run into a cash flow crunch and look into getting a business loan or a line of credit.

But be careful. Business loans are not cure-all's and you should consider the following:

1. Business loans are hard to get. Bankers look for past history before underwriting them. But what if your future if brighter than your past?

2. Business loans don't grow. And this is very important. If your business grows, you will likely need even more money. However, most banks hate making additional loans. Usually they demand that the first one be paid up first.

3. You will be on the hook for the loan - personally.

There are alternatives to the traditional business loan that are (arguably) better. They are factoring and purchase order financing. Both options are:

1. Easy to obtain. The factoring company finances you based on your future.... not your past history.

2. Flexible. Your line of financing grows with your business.

Before you look into getting a business loan, be sure to check out if factoring or purchase order financing might be a better choice.

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