Financing Your Small Business

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Image credit iStock/Ildo Frazao

Image credit iStock/Ildo Frazao

If you have been in business any length of time, you know that it is important to understand the Pros/Cons of various financial tools. We have attached a good article that outlines various ways small businesses use to grow their business. Each of these options have Pros/Cons and so we thought it would be good to give you the "Big Rig Lending" perspective on some of these 19 suggestions.

Bank Loan
Although typically the cheapest form of credit, Bank loans typically have slower turnaround times, require significant amount of information, and are generally for those consumers with credit scores above 650. Big Rig Lending is able to provide financing alternatives for customers with a wide range of credit scores, and do not require the amount of information required by a bank.Online lender/Peer-to-peer - Like Big Rig Lending, these companies do not require you to go to a physical branch location, but do 100% of the transaction online. However, many of these lenders have minimum loan requirements of $25,000 or more, and they do not cater to customers needing $3,000-$15,000 like we do at Big Rig Lending.Credit cards - Credit cards do provide a quick source of capital, and are accepted across the country. However, credit cards with decent limits typically require credit scores north of 620, and do not have a structure repayment plan. Big Rig Lending is able to offer installment loans with a 6/12/24 month payback.

Angel Investors/Venture Capitalists
Although many companies have been helped by angel investors and venture capitalists, there are some downsides with going this route. First, you have to give up ownership in your company. Second, they typically don't provide capital at less than $25,000. Lastly, as an owner, angel investors can potentially have a lot of say about the direction of your company. At Big Rig Lending, we are just lenders. We aren't looking to be an owner in your business.

Friends and Family 
For small companies, Friends and Families have historically been a great place to find capital. Friends and family interest rates are typically lower, and there don't have the hurdles to getting funding like there are with traditional lenders. However, there are many potential downsides with friends and family loans. What happens if you can't pay them back? How does that impact your family's dynamics at Thanksgiving, Christmas, and birthday parties? It is important to discuss the "what if" scenarios in the event you cannot payback your friends and family in the agreed upon parameters.

Tap into 401k
For those individuals who are working at a company that provides a 401k plan, this is a great lending option. Rates are typically low and you are paying yourself back. Biggest downside for truck drivers is they have to be an employee of a company that offers 401k. If you are an owner-operator, you may have other retirement investment options, but a 401k may not be one of them.

Home Equity Loan
For those individuals who own a home and have good equity, this can be a good source of capital especially with typically low rates. You must have good credit to be able to access this type of product. At Big Rig, we look at your truck as your source of capital - your equity line. One that you can access quickly with no closing fees.

Crowdfunding sites like Kickstarter and Indiegogo have received a lot of publicity and have become a good tool for raising capital. Unfortunately, this is not a quick process. It is not a good option for someone who needs quick funds for repairs, insurance, or other working capital needs.

SBA Loan
The SBA has helped many companies over the years. Two biggest challenges with the SBA is that you have to go through a traditional lending institution like a bank, and there are a significant amount of forms and documentation requirements. If your goal is a quick turnaround, that will not happen with the SBA programs.

Micro loans
Micro loans have increased in popularity recently with Merchant Cash advances being the most popular. To obtain a Merchant Cash advance, you must process customers transactions via debit/credit cards, and these loans typically have daily paybacks required.

For truckers, factoring is an excellent financing vehicle. It allows the truck driver to avoid having to underwrite/credit analyze their customers. The driver can focus on what he/she does best - driving. We have worked with a couple of factoring companies in the past and would recommend your reaching out to Interstate Capital at 1-866-874-9358.

As you can see, there are a wide variety of financing products/companies. Big Rig Lending focuses on the financing needs that are unique to the truck driver/owner-operator. We offer title pawns and installment loans with quick funding turnaround, minimal documentation requirements, with no truck inspection required.

For additional information, check out 19 ways to finance your business venture.

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