Ask the Expert: How do I get quick cash for my business?

How do I get quick cash for my business without taking out a loan?

If you're looking to purchase new equipment vital to your business or take advantage of a short-term sale to build up inventory, you have several safe options for bringing quick cash into your business.

Invoice factoring
A factoring company (or simply "factor") will pay you to assume ownership of your accounts receivable. Instead of waiting for clients to pay their invoices, a factor will advance you a percentage of the total value of the invoices — minus a 1% to 5% fee — and pay you the balance after they collect on the invoices.

Factoring requires little paperwork and no background checks, and you can typically get your money within a few days, but the fees can start to add up if you use factoring frequently. Read more about how factoring works.

Business cash advance
If your company accepts credit cards, you can sell a percentage of your company's future credit card transactions to a business cash advance provider. Based on your average monthly transactions, the provider will advance you money in exchange for a fixed percentage of your future credit card receipts.

Like factoring, business cash advance doesn't require extensive paperwork, background checks, or even collateral, and you can get your money within 7 to 10 days. However, prepare to pay a steep premium for the advance — as much as 45% on the amount you receive. Learn more about business cash advances.

Credit card advance
You can leverage the available credit on your credit cards to get immediate cash without filing any sort of documentation, but this can be expensive and risky. If you need money for a short amount of time, a credit card advance comes through in a pinch. Just be prepared to pay steep up front fees (3% to 4%) and very high interest rates (20% to 25%, typically compounded daily).

You also have to factor in the impact a cash advance will have on your credit report since the transaction does get noted in your credit history even if you repay it right away. If your credit is good and you're confident that you will be able to repay the advance quickly, this can be a useful emergency plan.

Borrow from family or friends
You often hear that borrowing money from family members or close friends is a good way to lose them. But if they can afford to lend you the money and you approach this strictly as a business decision rather than a favor, you can make it work.

The best approach to borrowing from those close to you is to write up a quick one-page contract that specifies how much you wish to borrow, how long you need until you can repay the loan, and the amount of interest you're willing to pay. This way, they'll see that you're taking this seriously and don't intend on ruining your relationships.

Take out a business loan
Yes, we're reviewing alternatives to taking out a business loan, but it's important not to completely discount this type of financing. While business loans take a while to process and require excess paperwork and background checks, they can offer a reasonable-cost solution and a way to finance business growth. If you have a strong credit history and can afford to wait a few weeks to get the money in hand, applying for a business loan can still be a solid option.

Of course, getting a bank loan in a struggling economy can be a double-edged sword. While interest rates are the lowest they've been in years, the recent failure of high-profile banks have made it increasingly more difficult to secure a loan. The banks you work with are likely to conduct more due diligence and background checks than before to ensure you're able to repay the loan. Learn more about business loans.

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