There is #NoFreeMoney for your business (ever)

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It’s going to cost how much!!! You must be crazy!!!

That comment is made by entrepreneurs and business owners after hearing how much it costs to borrow money from either a mid market or private lender. The comment is usually followed by a series of expletives that I won’t type here but needless to say the cost of capital is something that can scare or upset someone who maybe hasn’t thought through the opportunity cost (see past blog post here). There is no such thing as free money when it comes to business but more importantly the money your business is using has a cost to it that you may never have thought about but you might want to.

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The most popular business loan request we get

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“I own a business and we need some money, can you help?”

“What do you need the money for?”

“Oh lots of things…”

“How long do you need the money for?”

“Maybe 6 months to a year”

“How will you pay it back”

“Well we are having a really good year and just seem to be a little short so we need to borrow some money to get over the hump”

This is the most common conversation I have with small businesses who are looking to borrow money.  They do not always know exactly why they need money and are not able to articulate how they are going to pay it back.  The most popular business loan request we get is for a business line of credit.  The problem is that a business line of credit usually means “working capital” (see blog here).  Working capital (and lines of credit) are very difficult to get.

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