Emergency Business Expense

Monday, November 12, 2012

Emergency Business Expense

Explore Your Loan Options 
When you are in business for yourself, you'll experience many ups and downs, especially if you are on a tight financial budget. So what do you do when an emergency happens? What type of emergency? Well, let's imagine just a few possibilities; your payroll gets stolen, a large client makes a depositing mistake, an employee has an accident with the company car, and you don't have any way of getting those deliveries made. 

These are just a few of the emergency events a small business can go through. It's at these times that you need the availability of an emergency loan. There are actually several ways to get a small business emergency loan, except that some methods take longer and have more requirements than others.

 Before you apply for a short term loan you should analyze your capacity to pay it back. Do you have enough sales profit to pay the entire emergency fund amount off in two to four weeks? If so, then the short term business loan may be your best option, as it is the quickest to approve. However, if you are looking for a smaller monthly payment then a standard bank loan may be your best solution.

 Your Financial Institution

 The first place you should enquire is with the bank you currently do business with. If you have been banking with them for years, and have some type of collateral then this is a viable option. If you take your business financial statement and talk to the loan officer, your bank may be willing to take the risk, especially, if your credit is good.

 Family and Friends

 You may be able to turn to your family or to your friends to get the funds you need. Sometimes they might feel comfortable enough to loan your business the short term funds it needs.

 The Short Term Business Loan

 Some lending institutions specialize in the short term business loan, but they also charge high interest rates. While this may not be the best option for long term loans as they must be paid very quickly to prevent higher loan terms and interest rates, it can be an option in a real emergency, or even when you need investment capital quickly. When applying for this type of loan just be sure all of the terms are clear, and you understand all the fees involved.

 The Government Business Loan

 This may be a funding option but it's not much good as a short term option, as government funding requires an extensive application and approval process, sometimes taking several months to complete.

 When in business, it is probably a good idea to start a small emergency fund nest-egg; a savings account of some type where you put away a certain percentage of your profit, and use this for emergency situations or as a lending fund for your growth needs. Talking about this option after you are already in the emergency situation is a bit like crying over spilt milk. Still, this is a good idea to keep your business out of future problems.

About the author:

 Darren Bechard enjoys sharing his tips and insights on business blogs. Visit wongaforbusiness.com for more business finance options.

1 comment:

Jille Mans said...

awesome post!! thanks for sharing this wonderful story i love reading it, i learned a lot from this and it gives me a different perspective on the topic!

business financial

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