No one really knows exactly what the post-COVID marketplace is going to be, except that we know it will be different. Many of the changes it has already put into motion were predicted to take place further in the future. The pandemic has accelerated those changes at a rate that has left many small businesses scrambling to keep up. Those changes require new equipment, new skills, and finding a new way to meet consumers’ needs. The Payroll Protection Program (PPP) and Economic Injury Disaster Loans (EIDL) are providing businesses with the funding necessary to address current needs but won’t be enough to prepare them for what lies ahead. While the post-COVID success plan may look different for each business, they all have one thing in common – the need for financial liquidity.
One way to provide the financial liquidity necessary is to evaluate existing assets to determine which, if any, can quickly be converted into cash. Some business owners may even have a cash reserve set aside for a rainy day. However, for many small businesses, their most valuable assets are the equipment they use to do business. Converting them into cash isn’t an option. Without the availability of liquid assets and any existing cash reserves already exhausted, how can a small business owner get the cash they need to succeed in the post-COVID marketplace?
A traditional bank loan is one option but in the current economic climate, they are becoming more and more difficult to obtain. This has caused many small businesses to turn to alternative finance companies to provide the financial liquidity they need. Alternative lenders offer a variety of options, allowing business owners to get funding that addresses their specific needs.
Small Business Advance
With a small business advance, business owners can quickly and efficiently receive the necessary funding for post-COVID success. The repayment method is simple, with a small, manageable amount deducted from your business bank account until your advance is repaid.
Merchant Cash Advance
This is a great option to improve financial liquidity for businesses that receive most of their revenue via debit and credit card sales. It is similar to a small business advance, however, repayment is made automatically, deducting an agreed-upon percentage of daily debit and credit card sales.
Invoice factoring can be an effective funding method for businesses that extends terms to their customers. It allows the business to leverage the value of unpaid invoices before they are due by selling them at a discounted rate to a factoring provider. In addition to bridging the gap between invoicing and collection, factoring can take collecting on those invoices off the to-do list. Once an invoice is factored, it is owed directly to the factoring provider.
Purchase Order Funding
Purchase order funding can help prevent a business from being unable to fill an order because they are lacking the funds to purchase the necessary inventory. Repayment plus a previously agreed-upon fee is made once the order has been filled and payment is received.
New methods of doing business often require new or additional equipment. This typically comes with a large upfront cost which could be a struggle when trying to rebound in the post-COVID marketplace. Equipment financing can reduce the upfront expense into smaller manageable payments without depleting existing capital.
Need Help with Financial Liquidity?
Adapting to the ‘new normal’ is crucial for small business survival. For many businesses, it means investing in equipment, training, revamping marketing strategies, and addressing the security issues of a remote workforce.
CFG Merchant Solutions offers a variety of funding options to provide the financial liquidity to fuel post-COVID business growth. Whether it’s a merchant cash advance, invoice factoring, equipment financing, or any of our other funding options, we will guide you in choosing the perfect solution for your individual business needs. Our team brings to the table more than 60 years of institutional investment banking experience in the credit, commercial finance, and capital markets. Contact us or apply online today.