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Is cash tight for your small business? Do you find it difficult to cover everything your business needs every single day? It’s typical for small companies to experience cash flow problems, however, the COVID-19 pandemic made it even more financially challenging for them.
Unlike large corporations, the majority of small businesses in Canada don’t have enough cash or liquid assets to buffer even a minor financial shock. The support programs launched by the government can help mitigate financial risks businesses face, but the process can take longer than expected. Add to that the fact that not everyone will get approved for financial support. Companies will need a quick infusion of money from other sources at one point or another to operate and survive.
If your small business in Canada requires fast cash, here are some of the best sources for you to consider.
Online Lenders
Online lenders can be a great source of fast cash. Unlike traditional banks or lending institutions, they have quick turnaround times on your loan. If they find that your business is legit, you can get the money deposited into your bank account within a few hours. Even with less than stellar credit history, you can still get approved.
These lenders often offer one particular financial product, which is the payday loan. Payday loans are short-term loans that require you to pay in one lump sum on your next paycheck, typically within 14 days. If you fail to repay the loan, most lenders can extend your payment due date but with additional fees.
Some states don’t allow payday lending. Thankfully, you can access payday loans in Canada online, if your business needs a quick financial solution. This option, however, only allows you to borrow up to $1500.
Invoice Factoring
If your company has a large volume of unpaid invoices but no cash-on-hand to use for operating expenses, you can use these invoices to get some quick cash. Simply sell them or any other accounts receivables at a discount to a factoring company. This valuable source of quick cash is what some small to medium-sized businesses leverage to take care of cash flow issues.
When you need the money immediately and your slow-paying customers aren’t about to settle any time soon, you can get faster payouts through invoice factoring. The factoring company can write your business a check minus their fees. These fees can range between one and five percent of the total amount.
Most factoring companies may offer to pay at least 80% of the invoice value upfront. They will then give you balance once they collect all of the outstanding invoices. Note that factoring fees can add up if your customers make payments later than 30 to 90 days.
Business Line of Credit
Having a business line of credit is another way to get fast cash for your small enterprise. It works the same way with a credit card – your company receives a credit line with a set credit limit. You can draw the funds you need at any time from this source, as long as you don’t exceed what’s allowed. You only have to pay back the amount you withdraw from your line of credit together with a corresponding interest.
Once you pay your dues and build up your balance, you can access the amount again on your credit line. This flexible source of fast cash can be used to improve your cash flow, purchase inventory, or purchase new equipment. The good thing about this option is you can withdraw funds at your convenience.
Qualifying for a line of credit, however, is rather tricky. Depending on the lender, some things they will look at include your credit score, annual revenue, and business history.
Lots of Quick Cash Options to Choose From
Encountering a financial setback can be frustrating, but the sooner you take action, the quicker you can get over these. The sources discussed above can help you secure the funds you need. Don’t hesitate to explore other options if these aren’t ideal for you and to find the one that best suits your company’s unique needs.
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