When businesses are experiencing exponential growth, one challenge they can face is a lack of cash – because a growing company is a company that needs a lot of cash. The more sales you make, the more capital you need.
To keep up with growing demand, companies invest in the assets they need, like equipment, to achieve their goals. However, cash used to purchase new equipment is tying up funds that could have been used to accelerate more growth.
Knowing how to finance business growth but also maintain liquidity can help companies to succeed long-term.
Equipment financing: Equipment financing solutions help companies to get the equipment they need to grow. Companies can choose to buy the machinery and spread the cost over a series of repayment periods or lease the machine for a period of time. Both options help companies to avoid a large upfront payment that would drain their working capital. Choosing either of these options can leave businesses with cash to support other growth efforts.
Equipment revolver: A revolver loan works as a line of credit for a company to use continuously throughout its loan terms. The revolver loan gives companies access to cash funds immediately when they need it. A growing company can encounter a lot of challenges and opportunities, and a revolver loan helps to ensure that your working capital needs and expenditures are covered.
Secured loan: A secured loan, or asset-based loan, is another solution for business owners wondering how to finance business growth for their company. This is when a company uses their collateral, like their equipment or accounts receivable, to get a loan that they can use to fund a growth strategy, cover business expenses, fill new orders and more.
Some of the key things a company will want to keep in mind when seeking equipment financing is: how much capital they will need, how quickly they will need it, whether they need that financing as one lump sum or if they need continual access, and the amount of time it will take to pay back the amount owed. Another aspect to consider is the return on investment (ROI) the company is expecting to receive. This will help ensure sustainable business growth.
Part of these calculations will require a true understanding of a company’s working capital needs, but other parts of the calculation will require making educated estimations surrounding the future. While companies can rely on past history, it can be challenging to make accurate projections if the company is growing rapidly.
Getting growth financing can be critical in helping businesses to increase revenue and expand. Keeping these things in mind will ensure they have access to capital when they need it.
When your business has the opportunity to grow, take it! If you are in need of equipment financing to expand and succeed, contact us. Our team is ready to help.