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Need a Bank Loan for Your Business?
Timing Can Make or Break Your Odds
Envision a small-business owner walks into his or her store one day and sees water gushing from the company bathroom, turning the whole place into a giant swamp. In this emergency scenario, the business owner doesn't have a lot of time to think, and doesn't have enough money on hand to repair the plumbing that day and start up for company.
When the company owner had a credit line in place for emergencies like thishe can easily write a check into the plumber and clean-up crew and cover a low interest-rate on the line of charge to pay the repair. InAs small-business owners, we tend to only focus on the here and how sales went that day and what is on the horizon for tomorrow. This shortsightedness can spell problem in regards to a dry spell in sales or a sudden circumstance where instant cash is necessary.
The truth is it is a lot easier to secure financing or a line of credit when you don't want one instead of wait till the situation is dire.
If your organization is doing well -- you've accounts receivable, business growth is strong and you've got good credit now is the time to think about a loan or a credit line. Save the money as a contingency plan in case something goes wrong or you experience a slow month and need the extra cash to cover operating expenses and deductions.
For most companies, there will be plenty of options for loans when business is good and cash flow is strong. However, options dwindle and can be extremely costly if you wait to think about loan options until you are desperate and in need of a lifesaver loan.stead, without a contingency plan, the company owner would probably have to take on a short-term small business loan with interest rates in the 60 to 80 percent range to repair the pipes and get up and running.
In MultiFunding, a loan broker company, I speak to small-business owners regular who are in desperate need of a loan to pay for a crisis situation. If these business owners would have taken initiative considerably earlier, once the need wasn't as desperate, they've had greater loan options using lower interest-rates.