How to finance a business can often be one of the greatest challenges that an Ohio business owner will face. For new businesses, there may not be that many financing options available. For struggling businesses, this may be true as well. Business financing decisions can have a lasting impact on both the business and the business owner.
When the business owner needs immediate and/or easy access to funds, one of the first resources tapped into is often the personal credit card. This may appear to be a prudent choice; however, it can lead to complications when it comes to keeping personal and business finances separate. Research indicates that a large percentage of new businesses will not last; therefore, the decision to utilize personal credit can create personal liability for the business owner.
One alternative financing option is a small business loan. While the business owner may have to provide a personal guarantee for a portion of the loan, the interest rate will most likely be much more attractive. This is a possible option for the business owner with a strong business plan and appropriate credit.
Another option for existing businesses is to sell their accounts receivables. Many times, customers will make purchases using credit offered by the business. However, until the customer pays, these funds are not available for use. By selling these accounts to another company, the business can get immediate access to these funds.
Business financing decisions play a critical part in the success of the Ohio business. Which option is best often depends on both the individual and the business. Experienced legal counsel can review the current situation and provide the guidance necessary to move ahead.
Source: nasdaq.com, “Don’t Fund Your Small Business Dreams With Credit Cards “July 27, 2017