Are you looking to start your own toy company? Now may be the best time to do so. Ever since Toys R Us went bankrupt and closed all their stores in the U.S., there have been more opportunities for smaller toy retailers. If you want to start your own toy business, you have to make sure you have enough working capital to hire employees, pay for utilities, and run your business. You can apply for toy business loans or check out these funding options for your toy business.
As the name implies, crowdfunding is a financing option that allows you to raise funds from the ‘crowd’ – friends, family, and strangers – rather than traditional lenders. There are different crowdfunding platforms that enable you to receive funding. Some of the important crowdfunding websites are GoFundMe and Indiegogo. Another benefit of crowdfunding is that you can use it to add validity your business idea. If a significant number of people support your idea, then you likely have an in-demand idea.
2. Invoice Financing
If your business processes invoices, you can use outstanding ones to generate working capital by borrowing money against them. With invoice financing, you typically sell your outstanding invoices to a third-party company called a ‘factor’ or lender. The factor will give you approximately 85% of the total invoice value upfront. Your customers will pay their dues directly to the factoring company; saving you time and effort in collecting payments.
Once your customers pay up, your factor will give you the remaining balance minus a transaction fee. Invoice financing is a great option for business owners who deal with cash flow problems due to pending invoices. In this way, you’ll have the working capital to spare since it isn’t tied to your invoices.
Insufficient credit history, lack of collateral and business history don’t automatically mean that you won’t qualify for any type of financing. You can try your luck on microloans – a small business loan that lets you borrow between $500 to $35,000. However, banks don’t bother lending small amounts of money to business owners. Instead, you can seek funding from alternative lenders. These lenders offer microloans that require less paperwork than banks and they’re generally more flexible with requirements and qualifications. Keep in mind that alternative lenders often have higher interest rates for loans compared to banks.
4. Business Credit Cards
Many people think that business credit cards are not a loan. However, it functions just like any other revolving forms of financing. Business credit cards functions just like your regular credit card; you use it to purchase something, and then repay it at once or installments. You’ll also be eligible for perks and reward points you can use for your business.
Good credit lets you qualify for a business credit card that offers 0% APR for a limited time. If you can make minimum payments on time, you’ll be able to have an interest-free loan throughout the duration of the offer. This makes business credit cards an excellent option if you want to effortlessly build credit and track business expenses.
5. Business Term Loans
A business term loan is what most people are familiar with when they think of small business loans. Once qualified, lenders give you a lump sum which you can repay over a fixed repayment term and interest rate. A business term loan from traditional lenders is more difficult to obtain, especially for startup companies.
Banks are the traditional lenders that provide business term loans. However, alternative lenders that operate online now offer term loans with a faster and easier application process. They’re more lenient as well and have fewer barriers to approval. But there’s a catch: interest rates are often higher than traditional lenders.
Good credit and established business history are often required. This helps lenders determine whether you can repay the loan or not. You can choose from short-term or long-term loans as well as secured or unsecured loans.
Toy Business Loans to Fund Your Toy Store
Toy businesses are one of the most profitable industries nowadays. With enough funding, there’s no limit to what you can do. On the other hand, if you’re short on cash, you can also try to apply for different business loans. With the number of resources available today, looking for the best financing option wouldn’t be a problem for many entrepreneurs anymore. Given that they have a clean credit background, they’ll have a higher chance of getting approved for a loan.
Whether you’re starting your toy business or already expanding it, applying for toy business loans is the best investment you’ll make. Not only will it help you prevent cash flow gaps, but it will also unlock a lot of opportunities for your business.