In Hamlet, Shakespeare wrote, “Neither a borrower or a lender be.” This can be doubly distressing for small business owners who have to lend money to their own business.
The very nature of small business makes it necessary to take out working capital loans from time to time. Unfortunately, the nature of banks is to deem most small businesses not credit worthy, forcing them to lend money to their own business. It’s vital to find alternatives and save your company.
The Troubling Situation of Needing to Lend Money to Your Own Business
It’s common for small businesses with less than five million dollars in sales to have all of the owners personal assets tied up in the business. This typically happens because when you are building a business, it’s very hard to get a bank loan.
Traditional banks want significant collateral to back up the loan or line of credit. It takes years and years to build a business successful enough for the owner to ever have a sufficient amount of cash to put up for a fast business loan.
You may think it sounds simple to take money from a personal account and lend it to your company. This seems like an easy way to get the fast business loan you need to tide you over when facing a cash shortage. After all, it’s all your money and you probably tell yourself that you will pay it back once your company is back in black.
However, it’s actually more complicated than you might think. There are personal tax implications that must be dealt with and it could open you up to liquidity issues. Thankfully, you do have other options.
What to Do If You Can’t Lend Money to Your Own Business
Studies show that more than half of small businesses fail within five years. Putting personal monies into your business means you could lose your savings, retirement accounts or other assets if the business folds.
Financing Solutions (www.financingsolutionsnow.com) is willing to give you a business line of credit and they don’t look at your personal assets as collateral. As a result, you can get your own personal cash out of the business. You will also have a cash reserve to turn to when needed, such as when you have an influx of business, a delayed customer check or an unexpected expense.
You can get a line of credit up to $150,000 from Financing Solutions. They offer a fast and easy application process and quick approvals. You could have a line in place in less than 48 hours.
The Pros and Cons of Small Business Lending
When it comes to small business lending, some might say the glass is half-full, others half-empty. Only you can decide which applies to your small business.
For example, there are numerous companies and more ways than ever to obtain a small business loan. Still, many of these companies charge excessive fees and interest.
The Small Business Association helps you find banks willing to lend. However, it can take years to wade through their extensive application process.
Of course, there is always fast business funding from Financing Solutions. With their help, your business will be brimming with success.