@tms7981 not entirely what the best path is but you should still look into the loan to see what the terms are so you can make a decision later once you explored all options and have all the hard data to make a decision.
@tms7981 There’s a loan market for working capital loans. PayPal does them, if you happen to take payments through PayPal. I believe eBay is partnered with lendingpoint to provide funding for sellers. These are usually tied into the payment processed though.
@immanuelsdottir Yes I’m working a full time job so I’m using that to pay ads,shipping costs, and any other unforeseen events. And then using all profits for more inventory. Profits are at $3.5k ish
@tms7981 You shouldn’t factor it this way. You’re essentially masking the true COGS and not able to figure if you’re business is actually making money or not.
Your salary from other employment should not be considered as part of your business working capital especially if you’re 6 months in.
You could be spending 4500 to market and sell your product thus generating a net loss of 1k and pretending that you’re making 3500.
@tms7981 You shouldn't mix personal finances with the business's finances. This will only cause you headaches down the road come tax time. Also, as others have said, you need to know your numbers to make informed decisions. You won't be able to do this, or it will be a nightmare, if you're personal and business finances are mixed. Just my 2 cents.
@tms7981 If you have served your customers well, you should be getting repeat sales or even referral sales. Build deeper relationships with them by finding out their wants and needs. Introduce new products using consignment deals, or setup strategic alliance deals. You shouldn’t need to pay for advertising or even physical products if you use some creativity.
The BIG problem is no one reorders from you and you have to keep advertising to sell to new customers.
@tms7981 If you can't get a loan, try to negotiate a better payment term with your suppliers (i.e. postpone payment to them as long as possible) to better your cash flow position
@tms7981 Several sources for this type of Microloan:
Check your local business incubator organization. They usually have on-hand directories of microloan providers who can help you out
Payment processing companies like square often do microloans like this. Your major limit with them is that they base it off of the transactions you're putting through them - so you'll have to check your processor
Local credit union. The process will probably be the same as a larger loan, but they're usually more flexible on terms
Credit card. Do you need $8-10k in total now, or is that the runway you predict you need moving forward for the next few weeks/months? I use divvy (getdivvy.com) and for you, they'd probably demand weekly payments, but if a 6-day "loan" works to keep you afloat, that may work.
You might opt for multiple options too. Maybe $5000 from the bank, $1000 through divvy, and then the other $4000 could come through various microloans or your payment processor.
@tms7981 I don't know if you can get a loan from a bank, but what about r/borrow or services like lending loop (if you're in Canada)
sure you're paying a bit more in fees, but at the very least you won't have to jump through too many loops.
also, if you don't mind too much, maybe use a personal source of funds like a LOC, then just pay it back with business funds. just make sure you properly report it on your taxes and what not.
@tms7981 I'm curious why you need it? I'm doing e commerce and the bank just keeps filling. Struggling to find new product lines is the only issue. Are you using your 5k sales a month to live and pulling it out of the company?
@tms7981 Not sure if the SBA EIDL COVID loans are still available but those are relatively easy to get and a large sum too. The interest rate is 3%, payable in 30 years.
@joshken Actually many businesses that require inventory need cash to grow. This isn't necessarily a sign that the business is doing poorly.
As the revenue grows, they need to keep larger inventory on hand. Of course, that inventory needs to be paid for somehow. This is a common scenario for retailers.
