When Cash Loans for Small Businesses Warrant High Interest Rates
Not too many years ago, if you needed a cash infusion for your business, you could drop by your bank and discuss the issue with your banker. Since your banker knew you and your business, your chances of receiving a cash loan were good. However, as author Ian Mount notes in the New York Times, those days are over. New regulations and economic conditions have left emerging small business with few options, and all of the alternatives are expensive.
There are times, though, when you absolutely must have a cash loan. Deciding whether your situation warrants paying the high interest rates requires you to evaluate what will happen if you do not receive the cash that your business needs. Depending on your specific situation, the following list demonstrates a few of the times when you may need to absorb the cost of a cash loan.
• If you will not be able to pay your employees on time, you might want to consider a loan. In addition to running afoul of state and federal labor laws, you risk alienating your employees. Employees are valuable assets that can help your business thrive — or sabotage your efforts.
• You might consider taking out a loan if your operation will be shut down without the cash. For example, if your utilities will be disconnected or you need suppl...
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... loan. Do you have obsolete equipment that you could sell? Would reducing your hours of operation provide the funds that you need? Do you have personal assets that you would be willing to part with for the sake of your business? Would a friend or relative be interested in investing in your business?
• Consider alternative sources of capital. Merchant cash advances, for example, allow you to receive a lump-sum advance on your future credit card receipts.
• Shop around to find the best offer. Compare interest rates, loan terms, monthly payments and additional fees that the lender may charge to determine which loan will benefit you the most.
In addition to loans tailored specifically to businesses, you might want to consider taking out a personal loan to meet the needs of your company. You can learn more about the various options available at the Personal Money Store.
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