In April, we celebrate National Financial Literacy Month, which serves as an opportunity to review your finances, assess your financial literacy and how it can help you take your business to the next level.
Financial tools & management
You’ve got the business plan down, but you need some help managing your finances and cash flow. Accounting, taxes, payroll—you deal with enough numbers every month to make your head spin. But you don’t have to tackle the numbers alone. These resources can help you keep your business in good financial health.
As a small business owner, you put more than your sweat and tears into your business—you also put in your own savings and risk your personal credit to get your business off the ground.
Small business owners seeking funding to start, operate, or expand their businesses often fall prey to lenders who are deceiving about the costs associated with borrowing. Monthly interest rates alone are not an indicator of the overall cost of a loan. Predatory lenders may hide additional costs, such as the annual percentage rate (APR), closings costs, service fees, and other fees or penalties. If you are a small business owner looking for financing, it is essential that you do your research not only to calculate cost accurately, but also to become aware of all lending options available to you.
Compared to bank loans, the application process is a lot more pleasant. The interest rates are higher than what banks would offer but it’s more accessible and convenient. Some common term loan providers are Funding Circle, Dealstruck, and Fundation.
A merchant cash advance (MCA) is a type of financing in which a business sells a percentage of their future credit/debit sales for an upfront amount. The MCA lender gets paid by directly debiting the card receipts from the merchant’s account daily, before the business itself can access any money from sales.
This article is from Excelsior Growth Fund, a Venturize supporter.
As you navigate business financing, it may be tempting to use your personal finances to help out when your business needs a boost, but that is not always the best solution in the long run. Separating your personal and business finances can help ensure you treat your business like the independent entity it is, while safeguarding your personal finances.
The Right to Transparent Pricing and Terms
You have a right to see the cost and terms of any financing you are offered in writing and in a form that is clear, complete, and easy to compare with other options so that you can make the best decision for your business.
What this means for lenders and brokers:
For most businesses there are two types of financing: debt and equity. Debt financing is a loan. The lender gives you money and you promise to pay it back with interest—the cost of borrowing the money. Equity funding means selling a piece of your business. An investor gives you money in exchange for owning a piece of your company.
When it comes to equity funding, women and minority owners have historically had a harder time accessing capital. Luckily, there are a growing number equity firms looking for women-led businesses to fund.
When it comes to equity funding, women and minority owners have historically had a harder time accessing capital. Below are some of the groups looking to change the status quo.
From startup and everyday operating costs to growth and expansion costs, cash is the lifeblood of a business. Large corporate organizations and small business alike are required to make decisions about where and when to spend (or not to spend) money. To do this, it’s imperative that you monitor what is commonly referred to as “cash flow.”