Avoiding a Bank Loan to Bolster Your Cash Flow

Since the economic downturn, mainstream lenders like banks and credit unions have been more cautious about loaning money to business owners. Entrepreneurs have to show pristine credentials in many instances to even be considered for financing through these institutions.

When you know that your own business lacks the credit standing and history to be approved for a bank loan, you may not even want to consider this financial option. You might be more interested in alternatives to securing financing and add more money to your cash flow. You may have more success gaining the money you need by working with in-house lenders, receivables financing companies, and cash advance businesses.

Using Assets at Your Disposal

Securing financing for your business can be easier when you use assets that you have at your disposal right now. This strategy does not necessarily mean that you have to put up your vehicles, building, machinery, and other valuables up as collateral. Instead, you can literally sell off assets that you would otherwise liquidate anyway.

The primary resource you can use to secure lending would be your accounts receivable. These accounts equate to money that you have coming into your business once your vendors and clients pay their bills.

Instead of waiting for that money to come in, however, you can sell the accounts for close to cash value right now. You can then use that money to bolster your cash flow or pay expenses that must be met right now.

Once you sell the accounts receivable, you no longer are in charge of them. The lender discharges you of your obligation to collect on them. It contacts the clients and vendors for you to alert them to send payments to the lender rather than to your business.

This convenience means you can focus on running more important aspects of your business rather than collecting on outstanding accounts. You also do not have to explain to the lender for what reason you are using the money. You also do not have to pay it back since the accounts will have been liquidated to the financier.

Mainstream lending can be a difficult process to endure today. Banks and credit unions are less eager to loan business owners money. You can secure financing and use the money for your cash flow or other purposes by selling your accounts receivable to a financier.


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