Consultants provide their clients with the advice and guidance they need to get their business on the right track. But when the time comes for consulting businesses to seek help, where can they turn?
Regardless of the industry, running a business requires hard work, planning and meticulous attention to detail. There are many moving parts to a consultant business — and many of those components come with a price tag.
When you need funding for your consulting business, whether for marketing or office space, here’s what you need to know.
Reasons to Apply for a Consulting Business Loan
When you run a consulting business, you might find you have short- or long-term needs that require a capital investment.
Here are a few reasons consultants pursue financing:
Make Large Purchases
Whether you need to upgrade computers or other equipment, acquire a company vehicle or make some other significant investment in your operations, a business loan can help.
Market Your Business
The Small Business Administration (SBA) recommends that small businesses spend 7%-8% of revenue toward marketing. You may consider financing, whether you want to invest in paid media, search engine marketing, social media or just want to revamp your website.
Pay for Rent
If you experience lulls in business and work out of an office, sometimes finding the funds to keep your doors open can be challenging. In times like these, funding for your consulting business can help you get through a temporary slow period and keep things running as usual.
Cover Utilities and Other Operating Expenses
Not only do you have to keep your doors open to stay in business, but you need to be able to keep the lights on, air conditioner going and the water running, among other things. That’s likely several thousand dollars each month, and it can add up fast. Sometimes a short-term financial lift can maintain the status quo.
Best Financing and Loans for a Consulting Business
Here are a few of the best business funding options for consultants:
SBA Loan
An SBA loan for consulting business owners is funding that’s guaranteed in part by the SBA, which typically means less risk for lenders. For borrowers who have been denied conventional bank loans, this is an option with competitive rates and terms.
Business Term Loan
If you have a large, one-time expense, a business term loan could be a good option. Loans can be short-term, with repayment spanning a few months, or longer in term, paid back over several years.
Working Capital Loan
A working capital loan, or “bridge loan,” is an umbrella term for many different types of short-term financing. They bridge gaps in funds when revenue is experiencing a temporary low. This type of financing can be used to pay rent, cover an emergency expense and more.
Business Line of Credit
If you want a flexible financing solution that’s there when you need it, consider a business line of credit. If you’ve ever used a credit card, you have an idea of how a line of credit works: Get approved for a certain limit. Use your credit line when you like (or don’t). As you use it, pay it down and your credit line will be restored up to the original limit.
Merchant Cash Advance
If your credit has seen better days and you need capital fast (in some cases, within a day of approval), a merchant cash advance could be your answer. This alternative financing has less stringent requirements because terms are shorter, payments are typically daily and interest rates are higher than other forms of funding.
