There are already so many different things that your typical small business owner is in charge of. Keeping track of payroll, keeping your employees happy, and taking care of your existing customers is already a handful in itself. Often, it's very easy to just look past any kind of financing options that might be available to you. Small business finance is just an area that doesn't get too much attention and gets put to the side in place of more important things. Most of the time, business owners are concerned with just taking care of existing customers and employees that they don't take the time to learn about all the options that are available to help their business run smoother. They don't educate themselves and instead let their banker tell them what's right for their business. We've outlined some very quick tips on different financing options that every owner should know about, this will give you just enough to be dangerous.

A small business line of credit is something that you use for short-term funding needs. So, for example, let's say your biggest customer hasn't paid you yet and you don't want to put too much pressure on them, but you really need to pay your employees this week. You would simply borrow on your line of credit to pay payroll. It helps you maintain a good working relationship with your customers because you aren't calling them on the days leading up to payroll and it also keeps your workers happy tha they are getting a paycheck this week. And when that Accounts Receivable comes into your company that you would pay back the line of credit. The purposes to bridge any cash flow gaps from when you pay out money to when you receive the money. Another typical use for the RLOC is when a certain supplier gives big breaks on purchasing inventory in bulk. Or if you can purchase offseason for big discounts and then store the inventory for yourself. In this situation you would borrow on your line of credit in order to purchase the inventory and then once that inventory is liquidated and you've collected your Accounts Receivable, that you would pay back your line of credit. Warning. It's easy to want to use available funds to purchase pieces of equipment or vehicles since its availble but you definitely want to only use the LOC for short term needs. Really, the line must be used only for easing the pain of the short term cash crunch. Using a RLOC correctly is something that can really help grow your business. There are a lot of growing pains involved with growing a company and a LOC can certainly help easy those pains.

As your company grows one thing most small business owners want to invest in is their own building. Purchasing your own building is a great way to invest in a long-term asset that will continue to pay dividends long after you've sold your business. When you're talking about the cost of the building, typicaly just getting a little better deal can make a huge difference. Banks will try to offer you the standard terms of 5 year fixed rates and 20 year amortization on your commercial mortgage, but with some negotiation you should be able to do better than that. In recent years banks have gotten more aggressive, in both are pricing in terms of the loans. Most banks in competitive environments are willing to extend the amortization up to twenty-five years and give you a fixed rate term of possible up to 15 years. There are even some government options where you can put less down than a bank will typically require. This is perfect for the long term investor because they are locking in a very competitive rate for a long time that's sure to save them money. The only caution is that for this loan program you need to be in it for the long haul because the longer the fixed rate, the longer the prepayment penalty. The way banks will price these loans is usually some kind of spread over the treasury. For example, a five-year loan at somewhere between 200 basis points in 275 basis points above the five year treasury. Banks or lending institutions will always try to make their money somewhere and its typically in points and fees. It's not uncommon for them to propose for these things, but you can usually get out of paying them if you are a good enough customer and plan to bring enough business to the bank.

Small business startup loans are something that most business owners need at some point and also something that banks generally aren't too excited about. That's why typically, the easiest thing to do is to either borrow funds from a trusted family member or to finance your start up with the use of something like a home-equity line of credit. Typically, since you have no track record and no collateral the bank will request to use your home as collateral for the loan, so the easiest thing to do is to utilize the streamlined process that banks have in place for HELOCs. This will be far easier and you'll end up paying a lot less in the long run. Home equity loans typically have a lower rate, more flexible terms, and a quicker approval process. The one objection that most business owners have to doing a HELOC is that they want to build up business credit. Unlike the personal side, there is no such thing as building business credit. The only thing that a bank will look at when you request your first loan is your company's financial statements. So, a HELOC is a great option to get you off the ground right away and ready to go. It should be noted that this doesn't mean that you still don't do the necessary business projections and businesss plan. Those are important things that every business should use when planning their business.

Nobody likes to add another task to their already busy day, but this is something that can seriously help grow your business and save you money by paying attention to it. In addition to bank loans are also SBA loans that can be used if your business doesn't quite fit the qualifications that the bank is looking for. A lot of small business owners are weary of using the bank's money to grow their business, it's really something that all fast growing companies have employed at some point. Proper utilization of capital at the right time is essential to taking your company from a small business to a large on in short order.