Any business owner knows that emergencies can come up at any time, and your company’s cash flow isn’t always going to be enough to cover it. This is why it’s so important to have an emergency fund in place, whether you rely on funding from clients or you have investors in your business. In case of emergency, having that money already set aside means the difference between moving forward or having to lay off some employees because you don’t have the funds to keep them on staff.
Every industry’s small business owners want capital to thrive, and while there are many working capital solutions available, not everyone qualifies for a loan. In reality, it might be difficult for young small- to medium-sized firms to locate banks that will give them a loan. It is very difficult for new enterprises to obtain business capital since they often lack the credentials to establish their credibility in the eyes of many traditional lenders.
Get your credit card limit raised
As a small business owner, you should always be prepared for emergencies. One way to do this is by having a business credit card with a high limit. That way, if something unexpected comes up, you can charge it to your card and pay it off over time. Plus, if you have a good credit score, you may be able to get a lower interest rate on your business credit card. And in the event of a recession or financial struggle, having a business credit card can help keep your business afloat. So if you don’t have one already, get one ASAP. And if you do have one, make sure to keep the limit high, so you’re prepared for anything that comes your way.
Reserve some cash from your business account
No one knows when an emergency will hit, which is why it’s important for businesses to have a budget for unexpected expenses. Unfortunately, many new businesses don’t have the financial cushion they need to weather an emergency. If you find yourself in this situation, don’t panic. There are ways to get fast funding to help you through tough times. To learn more about how entrepreneurs can secure cash from their business account as backup in case of emergencies, continue reading below. When you’re setting up your business account with your bank, see if there are any funds that can be set aside specifically for backup purposes. Then plan out what type of emergencies might arise and how much money each one would cost so that you know ahead of time what kind of reserve amount to save each month.
Emergency Fund Expenses
Most businesses have a budget for monthly expenses, but what about an emergency fund? An emergency fund is important for small businesses because it provides fast cash in the event of an unexpected expense. Financial struggles are common among new businesses, so having an emergency fund can help you stay afloat during tough times. It’s essential that you budget for this type of emergency situation if your business has one.
The size of your emergency fund will depend on how much money you make and how often emergencies happen in your industry. For example, if your emergency funds cover at least two months’ worth of income, then you’re likely fine as long as emergencies only happen once every six months or less. However, if emergencies are happening more frequently than that and your emergency funds cover only one month’s worth of income, then it might be time to review your options with an expert financial advisor.
Borrow Money From Friends and Family
In case of an emergency, one of the first places you should turn to for financial help is your friends and family. If you have a good relationship with them and they’re able to help, they may be willing to lend you money. You can also look into borrowing money from a bank or credit union. There are also online lenders that may be able to help you out. Just make sure you do your research, so you know you’re getting a good deal. The last place you want to go for money is the pawn shop. Yes, it’s true that in many states, a pawn shop loan won’t require collateral, but the interest rates are higher than what most banks will charge. That’s not even considering how much of your cash you’ll end up forfeiting if you don’t repay on time.
Overdraft Protection
If your business has a checking account, you may be able to sign up for overdraft protection. This means that if you try to make a purchase and there are insufficient funds in your account, the transaction will still go through. There may be a fee associated with this service, but it can be worth it if you’re worried about an emergency situation arising. With today’s economy, new businesses might have trouble securing funding from banks or other institutions. In order to keep their company afloat during a financial struggle, entrepreneurs need to look at alternative sources for fast cash like working with a small business lender.
Credit Card Cash Advances
In an emergency, your business may need fast cash. One way to get fast funding is to use a credit card cash advance. This is when you use your credit card to withdraw cash from an ATM or bank. The funds will show up in your account immediately, but you will be charged a fee and interest. If you are in a financial struggle, this can be a way to get fast funding for your business. However, it is important only to use this method as a last resort as it can be very expensive.
Overdraft Lines of Credit
An overdraft line of credit is a great way to get fast funding in an emergency. However, there are some drawbacks to this type of financing. First, you will need good credit to qualify for an overdraft line of credit. Second, the interest rates on overdraft lines of credit can be high. Third, you may be required to pay fees if you use the line of credit too frequently. Fourth, you may be required to put up collateral to secure the line of credit. Fifth, the line of credit may be canceled if you miss a payment. Sixth, the lender may require you to open a new account with them in order to get the line of credit. Seventh, the lender may charge a monthly fee for having the line of credit available to you. Eighth, lenders usually limit how much money they lend through these lines and give them out based on your income and assets. Ninth, if your business fails, then it’s likely that your personal assets would be liquidated in order to repay any debts related to the business. Finally, one benefit is that overdraft lines of credit typically come with low approval standards so most people should qualify for one.
Get what you need for your clients
Any business growth can be severely hindered by the lack of cash flow. Merchants rely on the professionals at Waterview Capital when they require urgent funding to support their business. We’ll work with you to identify the ideal same-day funding option to propel you and your clients toward success. Waterview Captial is backed by years of company funding expertise.
Your premier source for Working Capital
When merchants need fast funding to help their businesses grow, the experts at WaterviewCap.com are ready to help. We offer same-day funding to provide ISOs the tools they need to help their clients succeed!
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