While administrating your small business, you can often end up at some roadblocks and dead ends that can stall the growth of your establishment. It is safe to say that financial hiccups are one of the commonly recurring issues that you would face from the get-go to its development into a prospering business model.
Since you need a helping hand, Financing can get the job done efficiently and conveniently with reference to a wide array of prospects to choose from such as conventional loans or mezzanine financing. Primarily, there are two ways to get your growth expedition funded, the first option would be to have a sponsor who is willing to finance your small business with no questions asked, but this is only possible in general if you have familial ties with the investor.
The other way to go about this would be to explore more about the potential of your business and determine its eligibility for the most suitable mode of financing on the basis of the present resources at hand.
Determine Your Potential:
As an entrepreneur, only you would have the insight to the potential that your business upholds. Therefore, this potential is what guides you through to financing the future of your small business. There might be thousands of financing premises that you can direct yourself to, but some of the most credible ones include but are not limited to short term loans, business term loans, merchant cash advance, commercial mortgage, and startup loans to begin with.
The above-stated financing solutions can procure a variable amount that can be lent, but it revolves entirely around the kind of option that you have opted for. The amount fires up from a meagre $200,000 via a Merchant Cash Advance that can be usually provided within 24 hours ranging all the way up to a full-fledged Business Acquisition loan shooting up your amount to a whole of $5,000,000.
Examine your Financing Option:
Once you have set sail for a particular financing option, then there is no turning back as the stakes are already on the table. Now the logical approach would suggest that to minimize any risk factor; it would be wise to compare all possible considerations with the one that you have chosen to embark on.
There are a total of four metrics that are generally utilized to estimate the cost of that financing and how much it would cost your business in total.
- The calculation of the total cost of capital that includes the fees associated with the loans that do not charge interest or other hosting charges.
- Then comes in the APR, which represents the Annual Percentage Rate, this is the metric that works around to estimate how much the loan or financing would cost you on an annual basis.
- When it comes to loans or other conventional financing methods, then the average return amounts are distributed on monthly intervals, and this metric helps you determine the affordability criteria of the monthly instalments.
Interests and other financing fees are implemented on every dollar that is borrowed, and this is where this metric comes to save the day by calculation how much you owe on every dollar.
What More Do You Need To Be Aware Of:
But since every financer functions independently, each of them have their own policies and regulations to uphold. This makes it tough for you dedicate one financer for yourself as you are not aware of the pros and cons they might entail.
Innovation Lending Platform Association worked with other financing entities to devise a tool that compares the analytical, strategic, and financial aspects of every financing solution according to specified metrics. This tool is referred to as a SMART Box™ or Straightforward Metrics Around Rate and Total cost tool.
This not only generates a healthy comparison for you but also gives you an insight as to what the latest developments have been with respect to the transparency of that financing method.
Other Requirements for Financing:
Since financing depends entirely on the current standing of your business, each case comprises of a separate eligibility criteria that require different kinds of verification generally via documented proof. It can include the details of your business, such as finances, balance sheets, profits and losses, etc.
You can also be inquired for your personal information, such as educational background and employment details. The final metric that pretty much sums up your entire financial history would be your credit report that lenders can typically request from the major credit bureaus.
But managing the finances of your small business has never been this easy as NCR Counterpoint has made it. NCR Counterpoint is a state-of-the-art Retail Management POS system that takes care of your business for you in real-time while you can sit back and relax to focus on the more critical aspects of running your business more efficiently!