Why Business Financing Trumps 7 Other Financing Options – Part II
“Money problems can always be solved by a man not frightened by them.”— Robert A. Heinlein.
The opening quote for this blog is quite true. Businesses facing money crunches can easily be overwhelmed by the seemingly immense problem of securing working capital. It takes strong constitution, planning, and business execution to successfully resolve business capital problems. Nevertheless, it must be noted that some financial solutions could be dangerous. For instance, one finance option that could possibly tank your business is a bridge loan. Let’s examine what a bridge loan is and why it can be very dangerous.
A bridge loan allows companies to get funds quickly without heavy documentation. These loans are mostly used when businesses are in the process of securing other funding, but need a “bridge” to get them to that point before going under. Bridge loans often require collateral that is vastly more valuable than the loan, which presents danger. If the loan is not paid off on time, the business could lose expensive collateral for very little capital. Additionally, these loan types are marked by high interest rates, short payback periods, and high closing costs (many of which are unrecoverable even if a business secures other financing before planned).
Business finance leasing (or our Working Capital Program) is easily a more viable solution for business financing. Instead of surrendering collateral, a business finance lease is usually based on the business’s historical cash flow. Just as in bridge loans, business financing requires minimal documentation yet the risks involve extra interests instead of collateral loss.
If you have questions or would like to inquire about applying for any sort of financing, give STRADA Capital a call. We are versatile an offer construction equipment leasing, truck leasing, equipment leasing, working capital, and business finance options. You can also fill out a quick application to get your business the resources it needs to stay competitive.