08 Jun 5 Ways to Prepare for the Next Business Lending Bubble
By Jules Dalsey, Quote 2 Fund Founder
What if your bank hadn’t cut business lines of credit, recalled or turned them into term loans while cutting additional capital access, would your business be in a different situation today?
What if I tell you that sooner or later credit will be tight again, and your shot at securing a business financing approval with favorable terms will soon be gone?
What can you do today before another financial crisis hits?
Cut cost. It’s easy but having peace of mind that funding is secured is much better. Secure your funding soon before all things dries up.
Don’t use cash. Use credit as much as and as long as you can even though you might incur interest expense. Cash carry a lot of safety, not credit. Remember, when credit card companies cut back on credit limits?
Don’t use a credit card. That is–until you have cash to pay in full. If you do decide to save cash over a credit card, make sure to balance your credit and learn how to take advantage of the teaser rates. At the same time, be wary of teaser rates. It will have an impact if you don’t see an influx of income to compensate for the cost of having credit available. Remember, cash is the closest you have to liquidity when compared to equipment, RE, and other fixed assets.
Liquidate assets. Cash in on unused office equipment and space. Increase cash flow, cut back on square footage and sub-lease unused office spaces to generate additional cash flow. Start cutting cost at all cost to make sure cash is available.
Don’t be afraid to borrow. Learn to leverage both business and personal lines of credit, borrowing only what you need.
Do your business a favor and amass cash even if it’s to borrow. Then, at least you will have cash and credit that can no longer be cut when it’s all maxed out. After all, lenders can only cut the remaining available credit. Note: A lender may have the right to recall. Check the contract. Look out for something called an “Accelerated Term” and other clauses they can exercise at will.
Chat with a funding professional to find the best financing fit for your needs.