What are the finance options for SMBs?

The type of cash-flow solution you choose matters. Choosing the wrong type could severely disrupt your business so it's essential you get it right.


By Derry Cosgrave

When you’re working to get cash flowing again in your business, you may feel like any finance solution will do.

But the reality is, the type of cash-flow solution you choose matters. Choosing the wrong type could break your business down the track, or severely hamstring it.

Do your research to learn what options are out and weigh up the pros and cons to work out the best cash-flow solution for your business.

Here's our quick guide to the most common cash-flow options for SMBs:

1. Credit card

The classic go-to option for extra capital, a credit card is a quick fix if you need cash fast. You probably have one or two personal credit cards, so you know how they work. But for your business, high interest rates and limitations on where you can use funds means they’re not a sustainable option for healthy cash flow.

2. Invoice Finance

Invoice finance is where you borrow money against the amounts due from your customers. The lender pays you in advance using your unpaid invoices as collateral. It’s like a revolving line of credit – you only pay for what you use and can draw down against new invoices as you issue them. The catch? You never get the full value of the invoice. Depending on the lender, you might get up to 80% upfront, then when your customer pays your invoice, you receive the rest minus fees and interest.

3. Invoice Factoring

Not to be confused with invoice financing, invoice factoring is where you sell your unpaid invoices to a factoring company at a discount. They then collect payment directly from your customers. However, rather than the full invoice amount, you might only get between 60–80% of the invoice value. When your customer pays, they will remit the balance less their fees. If the payment was late (and let's be honest, almost all invoice payments are), you'll get hit with additional fees and charges. And if your customer defaults, then you'll need to repay the factoring company.

4. Marmalade Invoice Payments

Marmalade is a payment service that allows you to cash in eligible unpaid invoices any time to get paid on demand. What makes Marmalade different is that it is not a loan. It’s no risk and low cost, with a small one-off fee and no interest. You have complete control of when you want your invoices to be paid – and we mean paid, not financed.

5. Small Business Loans

There are two main types of loan: secured and unsecured. Unsecured business loans are more accessible as they don’t require assets as security. But they often carry higher interest and fees. Secured business loans are harder to access but open the door to bigger loan amounts. The trade-off is that you’re putting your assets on the line.