I need cash now!
Seeking short or long term funding for your tradie business may feel like a challenge but knowing where to start and who to turn to for help, can get you moving forward with confidence very quickly.
5 ways to extra cash
Ask family and friends
They are usually the easiest and fastest to access.
- How much you need
- What the funds will be used for
- How and when they will be repaid. Is instalments an option?
- What compensation they will receive. Is it interest, and how much?
Credit cards to fund short term cash flow shortages
A credit card can do a lot for your business especially if you can manage it well. In Australia many credit cards have an interest free period (e.g. 55 days) that you can take advantage off to fund business expenses throughout the month.
The types of expenses you can put on a credit card include:
- Petrol and vehicle
- Advertising and membership subscriptions
- Tools and office equipment
- Trade supplies and purchases.
But huge discipline is required! To avoid incurring high interest rate charges, you should try and pay off your credit card in full monthly.
Apply for a tradie business loan
Business loans are common for growing trade businesses. But before dashing to the local bank, remember there is a risk of application rejection, which in turn affects your credit history.
How best to reduce this risk?
Consult a mortgage broker that has experience with tradies. You stand a far better chance of getting your application approved then going at it alone.
A good mortgage broker knows exactly the type of information your need and is best placed to help you achieve a successful outcome.
Got any equity in your home?
Accessing a loan by using your home as security and equity is also a viable financing option.
The interest rates on home loans are generally lower than a direct business loan.
In terms of options:
- A lump sum amount based on a fixed rate or variable rate; or a
- line of credit facility, meaning you only pay interest when you draw down and use the funds.
Again, this is where an experienced finance or mortgage broker can help you determine the best option for your situation.
Review your expense and try cutting costs
Perhaps the starting point to getting some extra dollars in your pocket quickly.
Do a review of your expenses over the past year and assess what cuts are feasible.
- Do you really need to be paying full-time staff? Is part-time an option for any?
- Can you cut down on travel expenses by being more efficient?
- Can you delay the purchase of the fancy stuff: new phones & computers
- Are you getting the best deals from your suppliers. Is there any opportunity to seek better prices?
- Is all your marketing and advertising spend delivering a return on investment?
- With any existing loans, is there an opportunity to review and get a better interest rate?