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4 Ways to Get Financing Quickly Ahead of Small Business Saturday

Gerri Detweiler

Gerri Detweiler

Education Director at Nav
Gerri's been guiding individuals through the confusing world of finance and credit for more than 20 years. She is the author or co-author of five books, including her most recent, "Finance Your Own Business: Get on the Financing Fast Track." Today, Gerri serves as the Education Director for Nav, an online platform that matches small business owners to their best financing options and gives free access to personal and business credit scores.
Gerri Detweiler

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If you’re a small business owner and are looking to drive traffic this holiday season, make sure you take advantage of Small Business Saturday. An annual event, this holiday has become a phenomenon: according to BusinessWire, an estimated 104 million U.S. consumers reported shopping or dining at local, independently owned businesses — and spent $17.8 billion — during Small Business Saturday in 2018.

Whether you own a coffee shop, a yoga studio, a restaurant, or a boutique, participating in Small Business Saturday this year on Nov. 30 can help you earn additional profits and reach a new customer base. However, preparing for this event can be costly. If you’re short on cash, here’s what you need to know to get ready for SBS.


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Financing options to prepare for Small Business Saturday

Small Business Saturday can bring in an influx of new customers who are ready to spend money on your products or services. However, you need to prepare your business to take advantage of this opportunity. You may need to buy additional inventory, spend money on new marketing materials, and hire extra staff to deal with the demand.

Few businesses have the extra cash flow to pay for those things outright. If that’s the case for you, there are financing options you can use to pay for essential business expenses so you can participate in Small Business Saturday:

  1. Business credit card

One of the quickest ways to get extra cash is to use a small business credit card to pay for your expenses. Depending on your business, your revenue and your credit score, you could qualify for a card with a credit limit between $5,000 and $100,000 dollars. With a credit card, you get access to a revolving line of credit, so you can access that financing when you need it, instead of as a one-time lump sum.

Business credit cards are available to startups of all types, including restaurants, gyms, technology companies and more.

According to the Federal Reserve, the average annual percentage rate (APR) on a credit card that is assessed interest is 16.97 percent. While that’s fairly high, it’s still a less expensive option than many other alternatives.

Keep in mind that you need to use a business credit card responsibly. In most cases, card issuers make you personally guarantee the debt. If you miss payments, they could report that to the credit bureaus, and it could damage your personal credit score.


Related: 3 Simple Steps to Maximize Your Earnings This Small Business Saturday

  1. Online small business loan

If you need cash right away, one option is to take out a small business loan from an online lender. Depending on your business’ financials, you could borrow up to $250,000 and receive your money in as little as one business day.

To qualify for a loan, lenders will typically review both your business finances and may check your personal credit, as well. They may have minimum revenue requirements or may require you to have been in operation for at least a year or two.

While online business loans can be convenient, you should be aware that they often charge higher interest rates. And, repayment terms tend to be short, often just a few months (or even weeks) long.

  1. Business cash advance

With a business cash advance, also called a merchant cash advance, lenders give you a lump-sum payment in exchange for an agreed-upon percentage of future revenues or sales. Qualification will be based on your business credit and debit card sales.

Approval is fast, and as long as your business has a sufficient history of past sales, it’s easy to qualify. However, the cost can be high and will be expressed as a “factor rate,” rather than an interest rate or APR.

A merchant cash advance may be an option to consider if you have less-than-stellar credit. Because lenders get a percentage of your future revenues or sales, there’s less risk to them, so they’re willing to overlook low credit scores or will forgo a credit check entirely.

  1. Personal loan

If your business is fairly new, you may not have enough revenue or business credit history to qualify for a loan or business credit card. If that’s the case, there’s another way to get the money you need: personal loans.

With a personal loan, you apply for a loan in your own name rather than your business’ name. Lenders review your personal income and credit score to decide whether or not to issue you a loan and to determine your interest rate.

Personal loans are usually unsecured, meaning you don’t have to put down property as collateral. And, if you have good credit, you can qualify for low interest rates; some lenders offer rates as low as 3.99 percent. Plus, you’ll often have several years to repay the loan, making your payments more affordable.

However, taking out a loan can affect your personal credit. Make sure you can afford the monthly payments and always make them on time to minimize its impact on your credit score.


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Financing your business 

Small Business Saturday can be a lucrative opportunity for your business. If you need financing to gear up, start looking now. In general, the faster the financing option is, the higher the interest rates you should expect. Make sure you fully understand the interest rates and fees associated with each financing option and its impact on ROI. If a loan is too expensive, it could offset any extra sales you make and eat into your profits.

Preparing in advance and shopping around for different loans and credit lines can help you find the lowest rates. By starting early, you can get the money you need to have a great (and profitable) holiday weekend.

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