Debt Free Financing Vs. Bank Loans Which Is Right For You?

Getting access to working capital is essential to the sustainability and growth of small businesses. However, there are a myriad of options available to get the necessary funding, ranging from using personal savings, to bank loans, and debt free financing. We are going to take a look at these options to help entrepreneurs determine which solution is right for their businesses.

Personal Finances

Many startups and small businesses cannot get access to financing through traditional channels, such as bank loans, because of the prohibitive entry requirements such as impeccable credit and a strong financial history. Additionally, traditional loans can take a while to process, which can further prohibit entrepreneurs who need funding quickly. Instead, these business owners drain their personal savings and max out credit cards to finance their operations, which in turn places a strain on finances at home and on the company.

Bank Loans

For the longest time, bank loans were the main source of funding for small businesses and startups. However, as the country recovered (and is still recovering, in some aspects) from the economic crash of 2008, banks started employing more restrictive lending practices, including high requirements, intimidating payment schedules, and a time line which is not conducive for the immediate financial needs of entrepreneurs.

Debt Free Financing

The world of commercial finance offers a number of debt free financing solutions for small businesses owners who want to preserve personal savings, as well as their credit ratings. There are options such as merchant cash advances, which offer debt free financing with a flexible payment as opposed to a rigid schedule; factoring, which gives businesses debt free financing by converting open invoices to working capital with 24 hours; and purchase order financing to cover unusually large customer requests which would otherwise place a strain on business resources. There are even programs for unsecured lines of credit and debt-free financing for equipment.

So Which Is Right For Your Business?

Ultimately, the decision is up to you, but if you would like to preserve your credit ratings and get fast financing without taking on additional debt, call Lavan Financial Group at 203-308-4547. Our team specializes in offering debt free financing for new and small businesses across all industries, to help them get the capital they need to grow and prosper.