3 Ways to Get a Loan (Without Getting a Loan)Running a small business – and keeping the cash flowing smoothly – can be difficult to manage, especially during a tough economy. You need to pay your rent, your utilities, your employees, and your service providers, even as you wait for your customers and clients to pay what they owe you. Even when you know money is going to come in next week, it can be a challenge to pay the bills due today.

When gaps occur in your cash flow, that doesn’t mean that your business isn’t solvent. You just need some extra funds to offset the end-of-the month financial strain.

Here are three ways you can access funds quickly – without needing to go through a loan application process. Although they can’t cure significant financial problems with your business, they can help tide you over during a financial emergency.

Line of Credit

With a line of credit from your bank, you have access to a pool of potential funds on credit. These funds differ from a credit card. The account may act as an overdraft on your business checking account, require you to write checks through the bank, or be accessible through a card or account number.

  • A line of credit is provided through your bank, rather than a third-party credit card company. This may give you more leeway in negotiating the amount of funding you have access to and the interest rate on the funds you take out. Make sure you have a positive business relationship with your bank in order to make these negotiations easier.
  • Your business line of credit is there for when you need it – but that doesn’t mean you have to spend all of it. Remember that the balance of your credit line will affect your credit score. Pay off your spending as soon as the cash starts flowing again.
  • Responsible use of your credit line over time will lead your bank to gradually increase your limit. This can come in handy as your business grows over time.

Credit Card

Business credit cards can be an incredibly helpful resource, but also a danger to your good credit. Just like with a line of credit, responsible use is key. Don’t carry a continuous balance on your credit card. Only spend what you’re able to completely pay off at the beginning of each month.

  • Credit cards are convenient because you can use them to make a wide variety of purchases and payments. If you have little cash in your business checking account after payroll for the week and next month’s rent, a credit card can help you bridge that gap.
  • The fees and rates on your card will vary depending on the credit card company and type of card. Shop around and talk to your business banker to find a card that works best for you.

Invoice Factoring

The flow of cash into your business depends on your customers paying their bills on time and in full. When customers are negligent , this can hurt your business – even when you’re not at fault. Non-paying customers can sit on your books for months or even years while you wait for them to pay up. Sending them to collections can have mixed benefits, and you still may not see the money you’re owed.

  • If you’re waiting on a lot of unpaid bills, consider business invoice factoring. Invoice factoring companies essentially buy your unpaid invoices off of you. They pay you for a percentage of the total amount your customers owe you, and take on the responsibility of collecting the unpaid debt. If the customers pay up, everyone wins. If they don’t, the factoring company takes the loss – not your business.
  • Unlike with credit lines and credit cards, because the invoices are purchased outright, you don’t have anything to pay back at the end of the month.

If your business has gaps in its cash flow, or you need a quick influx of funds for an emergency or special purchase, look into business lines of credit, business credit cards, and business invoice factoring.

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