As they say, it takes money to make money. In order for your small business to grow, you need sufficient cash flow. You need to be able to maintain a positive flow of cash – more cash coming in than going out. If this has become a struggle, don’t worry. You’re not alone. At some point, every business finds itself in a place where it needs extra funds to keep things running smoothly.
You’ll also be glad to hear that a traditional bank loan is not your only option, nor is it necessarily the ideal solution. Today, more and more business owners are turning to what are called “microloans”.
What is a Microloan?
What is a microloan, and how does it compare to a traditional loan? With a traditional lender, you will be charged with interest and other fees, and you’ll experience long wait times and red tape. A microloan, on the other hand, is a small loan intended to help new entrepreneurs get their idea off the ground or help an established company expand.
Depending on the lender, microloans provide cash fast and involve much less paperwork. They are also much easier to qualify for. Whether your credit is good, bad or non existent, you can still qualify for most microloans. Groups that struggle to secure financing often find access to this type of loan is open to them (e.g. minorities, women, freelancers, sole proprietors, etc.).
How Microloans Can Help Your Business
There are so many ways to use microlending to fund your business. Here are just a few of the most common:
- Procuring or increasing inventory
- Meeting payroll on time, every time
- Managing seasonal business expenses
- Exploring new marketing ideas
- Covering the cost of training staff
- Boosting and maintaining cash flow
How to Find the Right Micro Lender for Your Business
Of course, every business is unique and faces its own set of challenges. Certain lenders are also better equipped and experienced in working with some industries over others. The key is to find a lender with years of experience helping business in your industry, and one who understands the obstacles you’re dealing with today.
Each lender will also have their own borrowing terms and underwriting procedures. So don’t be discouraged if the first few you talk to aren’t a right fit for your business. The lender you choose should offer some level of flexibility to make the process as hassle-free as possible. Most importantly, make sure you partner with a lender that will keep your short-term needs and long-term objectives in mind.
Michael Hollis is a Detroit native who has helped hundreds of business owners with their microloans solutions. He’s experimented with various occupations: computer programming, dog-training, accounting… But his favorite is the one he’s now doing — providing business funding for hard-working business owners across the country.