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7 Ways Small Business Owners Can Borrow Money


If your business-owning client needs more money for their company, they have plenty of options, ranging from taking out a PPP loan to heading to the bank. Financial expert Bryce Sanders goes over the numerous choices you can suggest, as well as some options business owners should always avoid.

Apr 5th 2021
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Perhaps they want their business to expand, or maybe they're just having cash flow issues. Whatever the need is, your business-owning clients often have a love/hate relationship with banks. The reason is simple: Your client needs money. Banks are in the business of lending it. Many people have often felt banks are most eager to lend to those businesses that least need to borrow. Let’s assume your small business owner in the local area needs to borrow money and asks you for advice.

You start by asking questions like: “What do you need the money for?” and “How long?” After more probing, you start to offer advice.

  1. Line of credit. Hopefully, they have one already. It was one of your first recommendations when they became your client. Businesses have notoriously uneven cash flow. A line of credit from the local bank allows them to get money quickly, with the understanding they will pay the line down when their clients pay up. The interest rate is variable and usually competitive. It’s a good short-term solution.
  2. Talk to your bank. They are in the business of making commercial loans. Your client has a history with the bank. They sensibly manage their line of credit. Their payment history is good. If the loan is large, they will likely want to see a business plan. Why does extending the loan make sense? Many banks will not lend to startups because the risks are too great. Here are other ways to win the bank over to your side:
    1. Personal guarantee. The issue with loans to a business is the company can declare bankruptcy, and the owner walks away. Will you agree to personally guaranteeing the loan? 

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