(Newswire.net — February 19, 2018) — For building your liquidity ratio, it is essential to raise the total amount of money that is available and simultaneously decrease the debt load. Generally speaking, it is a good idea to try and save about three to almost six months of entire living expenses in your bank account that is easily accessible to you. When you consciously reduce debts, you would effectively save the money that had to be used up for paying off the debt interest payments. This would go a long way in reinforcing your reserves. More often than not, liquidity planning is not given top priority by businesses but that could be detrimental to the health of the business. As per your unique requirements and individual situation, here are four effective ways of bolstering your liquidity.
Loans for Small Business
Traditional banks tend to treat small businesses with a lot of disdain when granting loans. Young owners tend not to meet the credit history and company profile requirements that they set, in which case the procuring of funds can get pretty difficult. A lot of private lenders and finance companies have understood this predicament and are willing to provide amenable terms. Lower interest rates over a longer period are now offered with minimal processing time, even to candidates who might be deemed “risky” otherwise. You should consult these firms and see what their terms are.
Peer-to-Peer Lending
You may not be eligible for a conventional bank loan as there are some qualifications that you need to meet. For instance, you may fall short of the minimum time you are in business. However, there is no reason to lose heart. There are still some attractive choices available to you.
Peer-to-peer lending seems to be the latest trend and its popularity is consistently on the rise since the last few years. Peer-to-peer lending has been successfully processing loans of different sizes to the budding or small entrepreneurs. With numerous investors available online, you would be able to get the loan you are looking for at terms that could be managed by you.
Micro Lending
Entrepreneurs often face situations where they can boost their business significantly but do not have the money to inject into the expansion. Micro-lending comes in here, with agencies and programs akin to PayPal Working Capital willing to lend anywhere between $500 and $15,000. If you meet the requirements of the US Small Business Administration, you may be eligible for a microloan of up to $50,000. Microloan terms are usually favorable because they are formulated by community-friendly, non-profit local organizations.
Personal Finance
Personal liquidity is vital for any business owner, especially if you are launching a business while you are in college. It is likely that your savings are meager and you are neck-deep in student loan debt, even if your business is doing fairly well. You should look to obliterate that debt as soon as possible. Refinancing and student loan consolidation are pretty decent options that help manage high-interest rates and multiple payments.
Ladder Your Investments
In case you are not having any handy cash and at the same time cannot appreciate the fact that money is lying in your savings account and getting poor interest returns, you may consider laddering your investments. This could prove to be an effective solution. Whether you are interested in investing in CDs or certificates of deposits, bonds, or boosting your inventory, laddering the available cash by spreading investments and costs over varying interest rates and time spans, you are able to go about maintaining consistent access to cash while getting more in terms of interest as compared to the savings account.
Conclusion
Liquidity is a must for businesses and individuals especially for budding entrepreneurs trying to grow their businesses. If you have readily available cash in hand, you could easily make the most of the opportunities arising and you could be then prepared for managing surprises efficiently.