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Benefits of Owning Your Business Property vs Leasing it.

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Leasing your company’s office building or manufacturing facility may work well for you right now, and even provide certain advantages. But any entrepreneur heading up a healthy, growing business would be wise to explore the compelling financial and practical benefits of owning your company’s real estate.

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Why Entrepreneurs Should Consider Purchasing their Property

When deciding whether to lease or own, you must consider various factors, including your life plans, the local real estate market and personal preferences. However, in most cases it pays to at least weigh the significant benefits associated with investing in your company’s home, especially if you plan to stay there for decades.

USE AS AN INVESTMENT TO SUPPORT RETIREMENT

Business owners often have their eventual exit plan and retirement in mind when they decide to buy a building.

The idea of being able to sell the company but keep the real estate appeals to many business owners. This isn’t a short-term strategy for those looking to sell their businesses in a few years, but owners with longer time frames are more likely to be able to pay off their commercial mortgages, keep the property and collect substantial income from future tenants in retirement. Meanwhile, long-term real estate trends should work in their favor.

Economic cycles typically last about seven to 10 years, so businesses looking to hold onto a property in a high-density area for two or three decades are likely to see the facility appreciate in value over the company’s life cycle.

Even an owner with only 10 – 15 years until retirement could benefit from investing in a property in a desirable commercial market, Financial experts, note that during the Great Recession and recovery, from roughly 2008 through 2012, commercial real estate values “performed very well.”

GENERATE RENTAL INCOME NOW

Owners, who often form LLCs to buy their property, may not need to wait decades to derive some income from the building.

Depending on the type of business, the building and their real estate loan restrictions, entrepreneurs may be able to rent out parts of their industrial facilities or office buildings to tenants, thereby subsidizing their monthly mortgage expenses or perhaps breaking even on the property.

Commercial real estate development trade group NAIOP reported strong industrial space demand in U.S. markets in early in recent years, with an historically low 7 percent national vacancy rate – decreasing the chances of a downturn in the industrial market. Meanwhile, record high asking rents across the country indicate that market supply continues to tighten steadily.

“Overall, the U.S. industrial real estate markets appear to be healthy and stable. It is the asset class that is potentially in the best position to weather any macroeconomic downturn that may come in the next several years,” the report said.

Of course, there’s no guarantee that every retiring business owner will instantly reap financial rewards from his or her real estate investment, but the property itself can provide some protection, nonetheless. Combining present-day benefits with the potential to build wealth long-term can make building ownership particularly powerful.

 Always consult your financial advisors when considering any retirement strategy.

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LOWER COSTS WITH FIXED MORTGAGE PAYMENTS

By fixing your monthly mortgage payments for a decade or longer, you can hold down costs by protecting your business against rising lease rates, which a landlord could increase annually. While you’ll have to make a down payment up front, you may well enjoy lower monthly mortgage payments as a building owner than you would with lease payments as a tenant.

Those making monthly lease payments, meanwhile, are missing the opportunity to build equity and own something.

In addition, business owners who’ve invested in their commercial real estate may be able to borrow against the property to extract cash flow for their company.

CUSTOMIZE THE FACILITY TO SUIT YOUR BUSINESS NEEDS

Business owners who lease rather than buy also may find themselves facing greater environmental, zoning or landlord-imposed limits on what they may do with the property. Noting some industries need significant latitude to customize their facilities, some, the building is very integral to the business.

It’s important for business owners looking to buy a particular property to explore the surroundings and the regulations and covenants affecting the real estate. “You’ve got to be sure that you know what the restrictions of the community are and they will work into your future goals.

He suggested that buyers walk around the area, talk to neighbors, check with the local government and use a knowledgeable broker. “You don’t want to get in there and have a legal fight. You never go wrong doing your due diligence.

LEVERAGE TAX ADVANTAGES SUCH AS DEPRECIATION AND INTEREST DEDUCTIONS

While businesses leasing their space can deduct rent payments from their income taxes, ownership also brings significant tax advantages, including potential depreciation on the property, which lowers taxable income, and a mortgage interest deduction. Consult a tax expert to help you analyze the numbers to see if they work in your favor compared with renting.

Considerations Before You Buy

Despite the strong advantages of owning your company’s building, an entrepreneur facing the decision should consider the positive aspects of leasing as well, including a certain amount of freedom.

As a tenant, for example, you’re less likely to have to worry about major building maintenance and repair. Along the same lines, a tenant generally doesn’t take on the same level of potential liability as a building owner does.

Depending on the type of business, a company leasing its space also may enjoy greater flexibility in moving to a new location. While a manufacturer may not be able to pull up stakes quickly or inexpensively, retailers and professional service firms typically find it relatively easy to move to a new storefront or office high rise.

Leasing also enables you to hold on to more of your cash now rather than coming up with a 10 to 25 percent down payment to buy a building. Further, if a sleek address is important for your business, leasing may give you more financial leeway to secure space in an upscale area where you might not necessarily be able to afford to buy property.

If you make the decision to buy instead of lease. You will want to consult with professionals with the needed expertise in your local real estate market, industry and local regulations to help you through that process.

While companies know they need extra space to grow, many don’t know exactly how to go about it. You’re spending your time running your business, gaining new customers and ensuring your product or service meeting your customer’s needs. 

 

Seek out the appropriate financial experts to help you secure the best options available at the time, interest rates, pay back terms, commercial mortgages are different then residential mortgage terms.  Identify the solution that will help you get exactly what’s needed to grow your business.

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Targeted Email Marketing. A, Inexpensive And Effective Marketing Tool. What you Need to Know.

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Inexpensive targeted email marketing campaigns can help you reach your marketing goals.  

Email marketing campaigns are one of the cheapest ways to advertise your business, but email blasts can easily get lost in the inbox shuffle. To get the most out of your email marketing campaigns, take time to develop a concrete process that attracts your subscriber’s attention and leaves them wanting to take action. This article will address setting goals, developing campaign ideas, creating effective subject lines, and choosing the images that best represent your message and brand.

Email marketing ROI

How to develop a marketing campaign

  1. Outline a clear goal.

The first step in creating a successful email marketing campaign is to outline a clear goal.

Some questions your team should address as you launch your first email campaign:

  • What is our primary goal with this email campaign?
  • Who is our target audience, and what types of language, offers, and information do they care about?
  • Did we implement measurable goals? If not, we aren’t able to determine the campaign’s success or failure?
  • What action do we want prospective clients to take upon viewing our email?
  • How long are we going to use this campaign before reevaluating it?

The answers to these questions should help you determine the type of campaign that best suits your needs.

2. Determine the type of email campaign.

There are several types of email campaigns that you may deploy, depending on the nature of your business and your goal.  The following are some of the most common types of email campaigns:

  • Sale or promotion: A sale or promotional email alerts current or prospective customers to a time-limited offer. You may also use promotional emails if your business or sales are seasonal.
  • Newsletter: Newsletters are not appropriate for all businesses, as they tend to omit a direct call to action (or CTA) for the reader – with the exception of directing them toward online communities. The goal of most newsletter campaigns is to become a source of trusted information and raise the business’s overall profile.
  • Reengagement email: When an existing customer stops patronizing your business, you could deploy a reengagement email to win them back. Reengagement emails can help you increase brand awareness and remind former customers of your services, especially if your business is seasonal.
  • Transactional email: While not always considered in email marketing, transactional emails are quite important, especially for online businesses. A transactional email, also called a trigger email or behavioral email, is sent to a customer in response to a transaction. A transactional email might be a confirmation of an order, a response to a specific question, or a confirmation of a refund in progress. Another common triggered email scenario is an abandoned cart email, which can be helpful for online retailers looking to reduce the number of abandoned carts at checkout.
  • Lead nurturing email: A lead nurturing email can be a transactional email or a promotional email. However, lead nurturing emails are usually typed individually by salespeople who are attempting to move leads through the customer journey, rather than sent en masse as promotional and transactional emails often are. Many companies use sets of customizable form emails for lead nurturing scenarios to ensure consistency and streamline communication for sales staff.
3. Compile a mailing list.

For transactional and reengagement emails, your mailing list will be self-generated from your existing customers’ contact information. New email campaigns intended to target a new patron, rather than existing or past customers, will require a fresh list. You can obtain mailing lists in several ways.

Buying a mailing list

Lots of companies sell mailing lists. Large companies targeting small businesses, like Vistaprint and DirectMail.com, offer mailing lists at affordable prices. The best email marketing services and top list broker services like these usually offer somewhat customizable lists. So, you may be able to choose between targeting individuals and targeting businesses, specifying ZIP codes, ages, industries, sales volume, and gender, for example.

If your business is all right to cold emailing, these big-box lists are not the worst place to start, but you get what you pay for. Boutique and high-end email marketing and mailing list firms offer tailored lists that fit your business, and such firms usually offer other marketing services, such as copywriting and graphic design.

Gathering leads online

If your website has decent traffic, you can gather leads directly by asking for users’ email addresses. Many businesses do this by offering a newsletter or a discount for new customers (for instance, “Sign up for 20% off your first order”).

To create a web form that can capture contact information without any coding, you can use a drag-and-drop style like the one Mailchimp offers. If you use an easily shareable form, you can link it to online advertisements, casting a wider net for leads than you would get directly from your website.

Creating your own mailing list

Some businesses are better suited to smaller, more focused mailing lists, and such lists can be partially or fully self-compiled. Networking events and trade shows are excellent opportunities to make contacts for your mailing list, but research works well too.

Market segmentation is the first stop on the path of creating your own mailing list. Many marketing departments begin the process of creating a campaign by identifying one or several profiles of the ideal customer. The thought is that if you cannot describe your potential customer, you cannot sell to them. [Read related article: 7 Ways to Build a Quality Email List]

4. Identify your ideal customers.

Your profile of potential customers should be specific enough to do your market segmentation for you. Let’s use a fake lawn company called Great Greens as a case study. The first thing a good marketer would note is that anyone who hires Great Greens is someone with a lawn to maintain, so homeowners and property managers are immediately the main targets. Since one of those groups is B2C and the other is B2B, two profiles may be necessary.

The other obvious segmentation is location. A lawn company is probably operating within a certain radius, so collect the applicable ZIP codes and rule out everything outside of that. Identifying all the property management companies within a few ZIP codes is a matter of a little online searching, which leaves the B2C profile.

The profile of your B2C company depends on the service or product you offer and who you want to offer it to. For example, if you decide you want Great Greens to be a high-end landscaping service, not one that offers small contracts, account for that in your customer profile. Then you need to imagine how that person makes buying decisions and how they like to be informed.

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Using market segmentation like a marketer

With a little imagination, it’s easy to picture Great Greens’ ideal client, and similar profiles can be constructed for any type of client. The information above provides clear guidelines for gathering leads based on home type (detached, with a lawn) and proximity to Great Greens. This ideal client also has relatively high income, so a good marketer would tell you it makes sense to focus on neighborhoods with a high median home price. Median home prices are a matter of public record and easy to obtain on websites like Trulia and Zillow.

A broad email marketing campaign, targeting high-income homeowners with lawns in your area, is a good way to begin your advertising. You have three options here:

  • Purchase email addresses for people in the areas you’ve identified.
  • Do research online, starting with physical addresses and names, and working your way back to email addresses – which is time-consuming and requires some digging skills.
  • Consider a well-placed local advertisement or snail mail marketing campaign, since physical addresses are easier to find.

How to write marketing emails that get results

An email is an opportunity to connect; however, if you are going to do the copywriting yourself, apply best practices.

1. Craft a great subject line.

Emails with attention-catching subject lines are more likely to be opened. The key is to keep your subject line short and to the point. Consider what your customers want to hear from you, not vice versa.

If you’re writing a subject line to notify potential customers of a sale, for example, focus on the sale itself. There is a tendency among amateur writers to overwrite, but subject lines are short by design.

Remember that most of your potential customers will read the subject line and nothing else. If you only have one sentence to make your sale, what do you want to say in that sentence to increase brand awareness? Always focus on what you can do for the patron, not how you want your brand to be perceived. You can convey your brand identity in other ways, like through word choice and design.

2. Be focused and clear

Focus is on the top of the list when building a successful email marketing strategy. Each email you send should have only one purpose; don’t try to make your customers aware of every service and every promotion you offer in one email.

If you have a lot of information to convey or your services are complex, consider doing a full email series, with targeted emails presenting different topics. Plan your topics from initial customer introduction of your products or services through the sales process to purchase. A newsletter with educational content on your products or services is an additional option business with a complicated customer sales process. Either choice you decide on, use an organized process when executing.

Ideally, targeted emails should be brief and to the point, similar to cover letters for job applications. What are you offering or showcasing, why is it better than the competition, and how can the customer get it? Don’t get so caught up in gimmicky taglines that you forget vital information like where your business is located, links to your website, or your hours of operation.

If you are not a natural writer, you might begin the process by writing in simple terms and adding finesse later. This can be helpful for clarifying which information is important and establishing the right order in which to present it.

Using the local swimwear line example, you could start out with something like this:

  • Our swimwear is a luxury product. Our brand is Swim Elite. Our swimwear is locally designed and handcrafted. We are having a 50% off sale. The sale lasts through August. You can order items on our website link listed here. People should order soon, while they can.

That’s not much of a sales pitch, but it illuminates the important information. For example, the mention of the 50% sale should happen earlier, since that is the main purpose of the email. Plus, customers need to know the product is both high-end and local, and you want to promote the name of the brand.

Once you’ve covered the basic information, you can now brighten the message. These are some examples:

  • Swim Elite is offering 50% off our luxury swimwear line! Our sale on locally designed swimwear only lasts through August. Order now!
  • Swim Elite’s luxury swimwear line is now 50% off through August. Order our locally designed swimwear while the offer lasts!

3. Include a CTA.

One of the most common mistakes novices writing targeted emails make is not including a call to action (CTA). The CTA is a core of copywriting and exactly what it sounds like: a call for the reader to do something.

Keep your CTA short and clear. If you can’t figure out what your CTA should be, it may indicate that your marketing strategy is unclear. Without a clear goal, it’s impossible to create a successful marketing campaign. 

These are some examples of CTAs:

  • Order now!
  • Register for this event today.
  • Request a price quote now!

4. Focus on engagement.

Higher engagement should be a priority of a short-term goal of your sales process. You can achieve engagement by directing your readers to additional content, your blog posts,  social media accounts, and educational content within the campaign itself, to help move prospects down your sales funnel. Your language concentrate on brand’s message and provide expertise in your industry that your competitors aren’t offering.

These are ways you should engage your audience:

  • Add links to subscribe to your newsletter.
  • Include the option to follow your social media pages.
  • Include links to your blog page
  • Include thought-leadership content in your emails.

5. Personalize the emails.

Personalized emails tend to perform better than generic email blasts. Personalization entails more than inserting the recipient’s name in the subject line, though. These are a couple of ways to create personalized emails:

  • Send targeted email campaigns based on a group’s interests, needs or demographics.
  • Follow up on any replies you receive.
  • Look into technology that can help analysis the potential data generated by your email campaigns.

6. Don’t spam your email lists.

Don’t flood your clients with too many emails, or they will end up in the spam box. It is more efficient to limit your emails to important notifications. Use the format to advertise special events, sales or new product offerings.

7. Watch your language.

The type of language used in your marketing email influences the response to your campaigns. For instance, write in the second person to give a personalized feel, and use actionable language to increase response rates. Phrases such as “brand new,” “limited time,” “today only,” and “last chance” can create a sense of urgency for readers to open your email and follow your CTA.

8. Test your copy first.

An expert marketer knows that all email advertisements need fine-tuning before their release. Use A/B testing to get the best responses from your campaigns and test each feature separately – including the subject line, body and CTA.

9. Keep your email lists up to date.

Maintaining your email distribution lists is worth the time and effort. Make sure addresses are inputted correctly and updated as needed. Although you want to attract new subscribers, you also want to make sure current subscribers receive your mailings.

Choosing images for marketing emails

The text in your emails is only part of the marketing puzzle. Ensure the images are not violating any copyright laws, are of high quality, add to the overall message and identity of the brand, and look good on mobile devices, laptops, and desktops.

Email marketing automation 101

Once you’ve established a marketing strategy and your campaign is ready to be initiated you should consider using marketing automation software to modernize your future email campaigns to collect data to fine tune your ongoing and future campaigns.  Email templates, including design templates, are a staple of many SaaS marketing products. Another useful feature is the option to schedule emails, customize them with customer names, track deliverability and open rates, track click-through rates, and automatically send trigger emails. Mailchimp and Constant Contact are popular marketing automation products, but there are dozens of others.

Some email marketing automation tools are also linked to larger popular CRM systems (like in the case of HubSpot, which offers a free trial,  and Salesforce), which can help your sales staff track the customer journey through your sales pipeline.  

Tip: If your company already uses a dedicated CRM, see if it offers any add-on tools to streamline your email marketing.

Source: Business.com

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What Is Yield Farming and Why All the Hype?

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Yield farming is the emerging trend in the crypto world that has grabbed the attention of many cryptocurrency enthusiasts. It looks very promising and is now considered one of the most popular ways of generating rewards with cryptocurrency holdings.

The crypto space is not only about bitcoin. New multiple strategies and techniques have appeared within the decentralized finance (DeFi) infrastructure aimed at providing users with more opportunities to generate larger incomes. Currently, one of the hottest crypto trends is yield farming, which seems to have taken DeFi by storm.

Yield farming is about lending your funds to others with the help of ingenious computer programs called smart contracts. As a result, you earn fees in the form of cryptocurrency in exchange for your services. Sounds simple enough, right? But let’s not rush — there are a lot of pitfalls and complexities that you might encounter during the process. That’s why it’s important to ensure you have enough background knowledge before you get started.

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What is yield farming?

Yield farming has rapidly forced its way into the decentralized finance (DeFi) world. It’s viewed as an effective strategy that investors turn to when they want to increase their investment returns. 

Yield farming provides the opportunity for crypto holders to lock up their holdings in return for rewards in the form of additional cryptocurrency.  

How does yield farming work?

Yield farming requires liquidity providers and liquidity pools. To become a liquidity provider, all you have to do is to add your funds to a liquidity pool (smart contract), which is responsible for powering a marketplace where users carry out several procedures with their tokens, including borrowing, lending, and exchanging. Once you’ve locked up your funds in the pool, you’ll get fees that have been generated from the underlying DeFi platform or reward tokens. In addition, some protocols can even provide payouts in the form of multiple cryptocurrencies, allowing users to diversify their assets and lock those cryptocurrencies into other protocols to maximize yields.

Keep This In Mind 

Before getting into yield farming, make sure that you’re fully aware of the following basics:

  • Liquidity providers deposit their funds into a liquidity pool.
  • Deposited funds are stablecoins related to the USD such as DAI, USDC, USDT, etc.
  • Your returns depend on how much you invest and what rules the protocol is based on.
  • You’re able to create complex chains of investment once you decide to reinvest your reward tokens into other liquidity pools, which in turn offer various reward tokens.
  • You should be aware that simply investing in ETH itself, for instance, isn’t considered to be yield farming. Lending out ETH on a decentralized non-custodial money market protocol and receiving rewards afterwards — that’s yield farming.

Why all the Hype? 

The key advantage of yield farming is it provides and opportunity to provide investors a good profit. Currently yield farming can potentially to provide more attractive interest rates than traditional banks. 

Though keep in mind there are some potential risks too.

2020 witnessed large increase in the popularity of yield farming. Large sums of revenue was generated via the Ethereum network, many yield farming platforms and DeFi projects are currently running on Ethereum platform. In addition, yield farming grants benefits to various protocols, most of which are just emerging.  

Currently yield farming is becoming widely popular do to it’s able to help a broad variety of projects gain initial liquidity and beneficial for lenders and borrowers. Yield farming also contributes vastly to greater efficiency when it comes to taking out loans.

What are the Advantages and Disadvantages of Yield Farming?

Profit is one of the most obvious advantages of yield farming. Yield farmers who are among the first to implement a new project may be rewarded with tokens that rapidly appreciate. Huge gains are possible if they sell tokens at the right time. Those profits can be re-invested in other DeFi projects to increase yield even more.

Yield farmers must typically invest a substantial amount of money upfront to make any significant profits — even hundreds of thousands of dollars may be at stake. Yield farmers face a major liquidation risk if the price drops unexpectedly, as it did with HotdogSwap, due to the highly volatile nature of cryptocurrencies, particularly DeFi tokens.

Also, the most effective yield farming techniques are complex. As a result, those who don’t completely comprehend all of the underlying protocols are at greater risk.

Yield farmers have put their money on the project teams and the smart contract code that underpins them. Many developers and entrepreneurs are entering the DeFi space because of the opportunity for profit. They start projects from the ground up or even copy the code of their predecessors. Even if the project team is trustworthy, the code often remains untried. making it prone to bugs and vulnerable to attackers.

The Opportunities and Challenges with Yield Farming

The majority of the DeFi applications use the Ethereum blockchain, presenting some significant challenges for yield farmers. The Ethereum network is suffering scalability issues ahead of the 2.0 update. As yield farming becomes more common, the Ethereum network becomes clogged, resulting in long confirmation times and rising transaction fees.

Due to this situation, some have surmised that DeFi could end up self-cannibalizing. Ethereum’s problems, on the other hand, seem to be more likely to support other networks in the long run. The Binance Smart Chain, for example, has emerged as a viable alternative for yield farmers who flocked to the network to take advantage of new DeFi DApps like BurgerSwap.

Additionally, Ethereum’s existing DeFi operators are attempting to solve the problem with their second-layer solutions for the network. As a result, assuming that Ethereum’s issues do not prove fatal to DeFi, yield farming will continue to exist for some time to come.

The five Yield Farming Protocols

To maximize the returns on their staked funds, yield farmers will frequently use a variety of DeFi platforms. These platforms include a variety of incentivized lending and liquidity pool borrowing options. Here are seven of the most popular yield farming techniques.

Compound 

It is a money market for lending and borrowing funds, where users can gain algorithmically modified compound interest as well as the COMP governance token.

MakerDAO

It is a decentralized credit pioneer that allows users to borrow DAI, a USD-pegged stablecoin, by securing crypto as collateral. A “stability tax” is chargeable in place of interest.

Aave 

It is a decentralized lending and borrowing protocol that allows users to borrow assets and receive compound interest for lending using the AAVE (previously LEND) token. Aave is popular for promoting flash loans and credit delegation. Borrowers can receive loans without putting up any collateral with this protocol.

Uniswap 

is a well-known decentralized exchange (DEX) and automated market maker (AMM) that allows users to swap almost any ERC20 token pair without the use of a third party. Liquidity providers must stake 50/50 on both sides of the liquidity pool to gain a share fee and the UNI governance token.

Yearn.Finance 

It is a decentralized aggregation automation protocol. It enables yield farmers to use different lending protocols such as Aave and Compound to get the best yield. Yearn. finance uses rebasing to optimize the benefit of the most efficient yield farming services.

Curve, Harvest, Ren, and SushiSwap are some other notable yield farming protocols.

Yield farming vs. other strategies 

Those who’ve just entered the cryptocurrency world may not be able to differentiate yield farming from other concepts such as liquidity mining, crypto mining, and staking. Even though they all have something in common and may look the same, in reality, they differ from one another and follow entierly different complex algorithms. We’re here to ensure that you won’t mix these concepts in the future and will be able to tell them apart.  

We hope in this article we’ve provided a fundamental understanding of Yield Farming. We will address Yield farming vs other strategies in an upcoming article, say tuned!

Source:  Odles Blockchain

DeFi, Why Should You Care about it? What is it? And More Importantly, How Will it Effect You?

Decentralized apps (“Dapps”) Using Blockchain to Change the Internet

The Fundamentals of Smart Contracts

THE UPS AND DOWNS OF BUSINESS CASH FLOW

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Your Business Cash Flow,  just like roller coasters experiences peaks that seem to pierce the clouds, to only then see dizzying descents that make you sick. You climb into the car, clutching the harness, and off you go. Then despite all that you saw beforehand, the highs and lows still take your breath away.  Hoping you make it to the next peak.

Cash-Roller-Coster

Welcome to cash flow volatility in your business.

One in four businesses fail due to cash flow problems.1 And despite forewarning, many business owners are underprepared to manage the ups and downs. During lean times, watching the bank account dwindle and worrying whether you’ll make it through the next payroll cycle. During flush times, feeling an almost irresistible urge to spend on a strategic upgrade that will help you take the business to the next level.

While you may not be able to predict every cash flow change, here are five ways to prepare your business to stay on track through the twists and turns.

Know your flow

The best way to manage cash flow problems is to prepare to avoid them altogether. Start by working with a financial professional, who can guide you in determining how much cash is flowing into and out of your business each month. Look at your expenses and income over the last six months and if the numbers appear fairly steady, calculate the averages. If your business is seasonal, pick a six-month period that includes your highest expense and income month(s) and calculate accordingly. Armed with this information, you can create a budget that helps keep your business in the black.

Be reserved

Cash flow slowdowns are inevitable in any business, so there will be times you’ll need extra cash to tide you over. Building a cash reserve is critical. Set aside at least enough to cover three months’ worth of expenses but aim for six months to feel really secure.

Establish a lifeline

Do you know your terms with your suppliers? The best time to set up a grace period is before you need it. Talk with your vendors to see whether you can extend your payment terms out by 30 days or more in a cash flow crisis. If you’ve established a good relationship with them by paying on time, they may be amenable to giving you a break when you need it.

Get hawkish on receivables

Past due invoices are a major irritant for businesses—and a key reason why positive cash flows go negative. Make it a priority with your team to get timely payment from your customers. Track your receivables on a weekly basis and have a system to follow up immediately on past-due invoices. Consider adding a small discount to motivate customers to make early payments.

Open a line of credit

Establishing a line of credit with your financial institution is a good strategy. In addition to helping you cover a cash flow downturn, you can use financing to underwrite growth opportunities—new equipment, more staff, an additional site—rather than using cash on hand or depleting your reserves, and suddenly finding yourself cash poor.

Cash is the lifeblood of your business. Managing its flow is critical to helping your business achieve and maintain success for many years to come.

Working Capital Loans for 2021

Working capital loans are short-term financing solutions designed to help your business finance everyday operational costs – such as rent, debt payments, payroll, and supplier fees. Think of them as a temporary boost to cover cash flow distributions. 

Working capital loans are not meant to finance long-term investments like real estate or equipment. That’s because they have short repayment terms, about 12 months or less. If you’re looking to finance a prolonged project, you may be better off seeking other financing solutions with longer repayment terms. 

Otherwise, working capital loans can be a solid solution for evening out seasonal lulls, temporary sales downturns, or periods of reduced business activity. In some cases, you may even be able to fast-track approval. 

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When is a Working Capital Loan a Good Idea?

Working capital financing can be a solid move when your business needs cash to cover everyday expenses. Seasonal businesses and retailers with sales dips are typical candidates for this type of financing. Other businesses that get hit with unexpected expenses or sudden cash flow disruptions may also opt for working capital loans to stay afloat. 

Working capital loans can be used to hire more staff, pay salaries, maintain daily operations, purchase inventory, or even cover the costs of equipment repairs. They’re ideal when you need cash for the short-term, but also expect revenue levels to recover. 

However, working capital loans aren’t a good fit if you need to finance a long-term investment. If you’re looking to open a new location or expand operations, a traditional business loan or business line of credit may be a stronger option. 

Types of Working Capital Loans

Working capital loans come in various shapes and sizes. What they all have in common is that they’re ideal for short-term, operation expenses. However, some may be better suited for specific types of financing needs. 

Term loans

Term loans have a specified funding amount and a predetermined repayment schedule. They grant borrowers a single, lump sum of cash and are paid back over a set period of time with fixed, equal payments. Term loans are ideal when you know exactly how much money you need.

Business lines of credit

Business lines of credit are more flexible than term loans. Instead of granting you a lump sum of cash upfront, business lines of credit feature a pre-approved credit line you can draw from as you need. You can borrow up to your credit limit and only pay interest on what you’ve borrowed. 

In some cases, you may be able to withdraw, repay funds, and withdraw again – so long as you don’t exceed your limit. Business lines of credit are ideal when you want flexible financing. 

SBA loans

These loans are guaranteed by the U.S. Small Business Administration (SBA) and issued through participating banks, credit unions, and online lenders. SBA loans can finance up to $5 million for working capital or other business needs. These loans are a solid, low-cost option for businesses. Unfortunately, they can also be hard to qualify for. 

Invoice financing

If you have an outstanding amount of unpaid invoices, you don’t need to be stuck waiting on clients to submit payments. Instead, invoice financing grants you the amount of your unpaid invoices at a discounted value. It’s a fast, easy way to obtain cash and you won’t have to worry about managing future payments. 

Merchant cash advance

Merchant cash advances are popular among retailers who experience seasonal lulls. They allow you to receive funds now, and pay back what you owe over time via a small percentage of future sales. In this way, repayment is based on your day-to-day sales rather than set monthly payments. 

How to Get a Working Capital Loan

Working capital loans are offered by banks, credit unions, and online lenders. Banks and credit unions typically offer the lowest interest rates on working capital loans, but they also have the lowest approval rates. 

In order to qualify for financing from these lenders, you’ll have to have good credit (a score of 680 or above), at least 2 years of business history, strong revenue, supporting documents, and more. In some cases, collateral may be required. If you can’t meet these requirements, your application may be rejected.

Online lenders, or fintech lenders, are another option for working capital loans. They typically feature fast approval and funding times, flexible requirements, and flexible financing solutions. You may even be able to secure funding with imperfect credit history. 

Compare Working Capital Loans

If you’re looking into working capital loans for your small business, make sure to consider National. National is an online marketplace that helps small businesses connect with financing opportunities. 

We maintain a database of over 75 different lenders that offer tailored working capital loans based on your specific criteria. You can also explore term loans, business lines of credit, SBA loans, invoice financing, and more. Our expert Business Financing Advisors take you through every step, offering advice and insight into helping you select the best financing solution for your needs. 

We maintain solutions for all types of credit score levels and set a minimum of 6 months of business history. Our lenders consider all aspects of your business when reviewing applications. We emphasize your potential for growth – rather than lock you into tight qualifications. And we fund fast – in as little as 24 hours. 
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National Business Capital is the top FinTech marketplace offering small business loans and financing. Harnessing the power of leading technology and smart people, we’ve streamlined the application process to secure over $1 Billion in financing for business owners nationwide.

Our Business Financing Experts work within our 75+ Lender platform to match you with the right option. Easily access the best low-interest SBA loans, short and long-term loans, business lines of credit and equipment financing all in one place.

We strengthen local communities one small business loan at a time. For every deal we fund, we donate 10 meals to Feeding America!

More Information

Suggested Reading:

Qualifying for a Business Loan, What Lenders are Looking For.

Grow Your Business, Succeed Through Access to Capital