Sometimes, business owners run into situations where they need a quick infusion of cash. A vendor may offer a significant discount for cash purchases of raw materials. A competitor may retire and offer to sell their business. A seasonal sales decline affects your cash flow. No matter what the situation, small businesses need to have a plan in place. Here are some funding sources that can help you quickly obtain cash.

Line of Credit

Speak with a lender to establish a commercial line of credit. A line of credit is a loan available to you when you need it. The loan is established before you need the funding, but fees and interest payments are not due until you request the money. In addition, you do not need to request all of the funding for which you had been approved. Apply for a line of credit when your business is in a positive cash flow, allowing you to negotiate better terms.

Credit Card

Small businesses should always have a business credit card handy. They are a great way to delay payments for items for a month but can be very costly if you carry over a monthly balance. Many business credit cards offer a cash advance to customers. When used correctly, credit cards can help you achieve your financial goals. Be aware of high-interest rate payments and avoid late-payment fees.

Accounts Receivable Financing

Accounts receivable financing, also known as factoring, is an easy way to obtain cash for unpaid invoices. You turn over some or all of your outstanding invoices to the company. The company then pays you a portion of the amount due. The factoring company then works with your customers to collect the payments. You then receive the remaining portion of your invoice minus a fee retained by the factoring company. Remember that you can turn over any portion of your outstanding invoices. The factoring company charges higher fees for older or more challenging collect invoices.

Angel Investor

Angel investors give their money to small businesses in exchange for partial ownership of the company. Depending on the terms of the contract, these investors may also provide knowledge and ideas to help your business grow. Angel investors may also be anonymous donors, family members, or friends.

As a business owner, you should have a list detailing the pros and cons of different funding sources should an urgent need arise. Knowing your options allows you to make faster decisions to benefit your company. Contact Lending Hub today to explore our working capital solutions for business owners.