Six Ways to Get Emergency Funds for Your Business

Managing cash flow can be a daily struggle for business owners. You must generate sufficient revenue to cover expenses, as well as plan for future projects. As a rule, businesses should have at least three months of expenses set aside. But sometimes the income you receive goes right back out, leaving little if any excess cash. This makes it hard to save, let alone invest in new products or grow your business.  

Bills can also come in for unexpected expenses that need to be paid right away. You may find yourself asking “how do I get emergency funds for my business?” Rest assured this can, and does, happen to any company. It’s especially true when inflation is high.  

The Federal Reserve reported that 77% of small businesses faced financial hardships in 2023.1 These challenges included 54% who had difficulty paying operating expenses and 34% who had a hard time with debt repayment.2 Respondents believe these challenges are directly related to the rising cost of goods and services. Forty-nine percent had uneven cash flow and 44% experienced weak sales.3

These examples underscore the importance of planning ahead to ensure cash is available when your business needs it.

Consider these six emergency business funding options.

When you need access to extra funds in a hurry, you do have a variety of options ― some you may not have considered. These six alternatives include both business and personal financial solutions to address cash shortfalls.

1. Tap your savings account.

   You likely have a business checking account, but do you have a business savings account? If so, consider using it to cover unexpected repairs, revenue shortfalls or other pressing financial needs. Setting aside additional funds provides an extra cushion for emergencies. If you haven’t set up an emergency fund, business savings accounts and business certificates of deposit (CDs) are a low-risk way to get started. Many of these accounts don’t require large opening deposits and even small monthly contributions grow as they earn interest over time.

2. Open a business line of credit.

   A business line of credit allows you to withdraw cash to cover expenses and only pay interest on the amount you're using at any one time. When working capital is tight, accessing your credit line can help to meet payroll or cover rent and utilities. Since you typically can't use a credit card to pay for these expenses, a line of credit can ensure you have funds available.
   
   Many choices are available for establishing a line of credit, including some backed by the Small Business Administration. Approval depends on your business credit score, so take the right steps to build and maintain your company's credit history to increase your chances.

3. Use your business credit card.

   It's typically much quicker and easier to get a business credit card than to get a business line of credit. Business credit cards offer a revolving line of credit you can use to cover expensive purchases or day-to-day expenses while waiting for client payments.
   
   In addition to payment flexibility, there are several factors to consider (including perks) when choosing the right card for your business. For example, many business credit cards offer rewards like cash points for regular spending. You can redeem these points for travel, merchandise, gift cards or cash back.