How to Make Business Financing Part of Your 2020 Comeback Strategy

Green shoots:  sometimes they are hard to spot. But even in these tough times, we can spot a few that give Small Business owners cause for cautious optimism. Summer is here, the number of Covid-19 fatalities has shown some recent signs of levelling off (with a few hiccups along the way), and a pleasant surprise at the end of May: there are not nearly as may unemployed in the US as previously feared.

So, while your growth plans may be on hold right now, our country will eventually be resuming normal (or “new normal”) operations, and we know from experience that Small Business will lead the way forward.  AWith that day approaching, now is the time to prepare for what could be an explosive growth opportunity.

As always, debt will be an important ingredient in reviving businesses. While the big banks still seem reluctant to invest in Small Business, many non-bank lenders are stepping up to help Small Businesses bridge gaps, replenish inventories, consolidate debt, and re-boot their business.  Only you will know when it’s time to relaunch your business; in the meantime, here are some ideas to help you think through how you can integrate financing options as part of your 2020 comeback strategy:

1. Fast-track growth: Financing can be used to fund the purchase of new fixed assets and equipment, procure new inventory, and hire new employees. In addition, many businesses will require physical alterations to accommodate social distancing requirements. Loan proceeds can help owners conserve cash while benefitting from historically low interest rates. Of course, owners will need to plan exactly how to deploy loan proceeds and how to comfortably service debt. PHAZIS offers a variety of options that allow owners to get the funds they need on the terms that make the most sense for their business.
2. Maintain equity: Growing a company with debt instead of equity helps owners retain full control. Selling equity creates new “partners” who may have all sorts of strange ideas. Owners avoid sharing control of the company by borrowing instead of selling stock. Borrowing also allows owners to keep their profits rather than splitting them with equity partners.
3. Reap tax benefits: Uncle Sam allows owners to deduct loan interest from their taxable income. That makes more money available to help fuel a business’ growth. Every dollar not spent on taxes is another dollar that can be applied to expanding a business, making tax deductions a critical success factor.
4. Build credit: Right now, we have only a hazy understanding of what the credit landscape will be when the economy begins rebounding. But owners can make borrowing an opportunity to boost a business’ credit scores (and credit lines) by repaying debt on or ahead of schedule. PHAZIS is proud to not charge prepayment penalties on any of our loans. In fact, you actually save interest on the early repayment of PHAZIS Fixed Term Loans and Lines of Credit. Improving credit lets owners access future loans easier and cheaper. (By the way, remember to regularly check your credit reports for accuracy to ensure you aren’t penalized by faulty information!  You’d be surprised how often these important records are not kept up-to-date!)
5. Consider tapping into future cash flows now: PHAZIS offers Flex Funding solutions that get you funding to invest in your business and can be paid with your receivables (outstanding invoices) and/or future credit card sales. These flexible terms let you benefit from the value of your receivables without the strain of meeting fixed loan repayment schedules. Bottom line:  you only pay when you’re getting paid!
6. Handle seasonality: Seasonality can complicate a business’ growth plans. The judicious use of credit can smooth out seasonal cash flows without derailing growth. In this regard, it’s critical you borrow from a lender like PHAZIS that doesn’t charge prepayment penalties. With the variability of seasonal effects, you don’t want to be saddled with extra fees for paying off a loan sooner scheduled.
7. Funding your ideas: Expanding a business can require substantial amounts of cash to cover costs such as R&D for new products and services. In 2020, many of us also need to adapt our business practices to include new customer needs or demands in a social-distancing world. Loan proceeds can pay for the costs associated with market research, product development, and operational changes. Borrowing also lets owners protect trade secrets rather than sharing them with new equity investors, especially during the vulnerable development stage.
8. Control capital costs: Equity often has a higher cost of capital than does debt. The reason is that equity investors require a high rate of return to justify the risk of a company’s earning success, whereas lenders only undertake credit risk. In addition, its usually much cheaper to arrange a loan than it is to issue shares. Couple that with the loss of autonomy caused by issuing equity and it becomes quite apparent why businesses often prefer debt capital.

Again, the responsible use of debt can be the key to growing your business for long-term success. PHAZIS arranges speedy financing of up to $5 million through a variety of flexible loan options. We invite you to apply online or contact us to speak with one of our Business Growth Advisors for more information about how we can help you survive the current challenges of the pandemic and prepare for a successful transition to the “new normal”!

How PHAZIS can help Small Business lead the way

PHAZIS is a new idea that came about during a pandemic.  With the global economy facing its biggest setback in decades, we watched as the Small Businesses that drive the US economy struggled to survive and access the government loans that were intended to help them. Many business owners spent days navigating the traditional loans application process only to find out that priority was given to bigger existing customers.  PHAZIS’s mission was born: bring flexible and responsible funding options directly to Small Business owners, make it quick and easy to do business with us, and get them back to growing their business as soon as possible.

PHAZIS is committed to the success of Small Business, and we look forward to partnering with you to provide the financing solutions to help you adapt and grow your business.