“Sometimes the things we can’t change, end up changing us instead,” says the unknown author of a quote whose relevance could not be more conspicuous during this time of the year, as many of America’s small businesses head into the summer business season. This season brings forced change to many of America’s small businesses that may have them seeking working capital to accommodate either a busy or a slow summer season.

1. Busy Season: For some, the summer business season will mean the entrance of a busy season, which will likely require the hiring of additional staff, stocking inventory levels, increased marketing, and a need for working capital to assist with financing many of the season’s activities.
2. Slow Season: For others, the summer business season could mean the entrance of a slow season, creating layoffs, little capital spent on marketing and inventory, as well as the potential temporary shutdown of the operations altogether until the next season comes along.

Here are some creative working capital options for any entrepreneurial situation that you find yourself in this summer season, such as operating an existing business that will have a busy summer season, an existing business that will have a slow summer season, or a brand new business that you will start from the ground to operate this summer.

0% Interest Business Credit Card Promo Offers

Many of the nation’s top business credit card issuers are providing 0% interest offers for nine to 24 months. Often, these cards will carry a 1 to 5% balance transfer fee, meaning that you can transfer debt from another, higher interest card for 1 to 5% total borrowing costs. Some of the best business credit cards that utilize these promotional offers include:

• The Blue Business Plus Credit Card from American Express

• U.S. Bank Business Edge™ Select Rewards

• U.S. Bank Business Edge™ Select Platinum

*You can find these offers here in Nav’s marketplace.

I carry a number of cards that bring my total line of credit availability to over $215,000. You could use these offers to help carry you through the seasonal period, similar to how Al Saleem of Suprex Learning does it.

“My business manages seasonal cash flow by using credit cards with short-term no-interest fees,” he says. “Many of my credit cards allow me to defer payment until six months later, which by then, I would have the necessary cash flow in order to pay the costs.”

Trade Credit

Vendors might allow you 10 to 90 days, or more, to pay for invoices, which creates “trade credit” for your organization. For example, you could purchase inventory with an invoice of $20,000 that might list “10% 10, Net 90,” meaning if you paid the entire invoice within 10 days, you would receive a 10% discount, but otherwise the invoice would be due within 90 days.

You could also try to structure your vendor payments to correlate with your seasonal highs and lows, which what Bryan Clayton of lawn care service Green Pal does.

“The way we handle our seasonal cash flow is by negotiating our vendor agreements to accept payment during the spikes of cash flow throughout the year, and to defer payment during the slow times of the year,” he says.

Merchant Cash Advance

A merchant cash advance can be a good option for seasonal businesses, as there’s no fixed payment associated with the product. An MCA is not a loan, but is a purchase of future credit card receivables using a factor rate.

For example, if you are doing $50k per month in processing, an MCA firm might advance you $50k in exchange for $60k of your future processing receivables. To collect the receivables, they would hold 20% of your daily processing batches until the $60k is received in full. This means that if your business has a slow period, you will pay a lower amount toward the advance, but if you have a high sales period, you will pay more.

Note, this product would not work for any enterprises that you choose to start up during the seasonal period, as you usually must have at least six months of operational history with at least $10,000 per month during that previous six-month period. This product could work, however, for any existing business that you have entering either a busy or slow season this summer.

Asset-Based Lending

If you have pre-owned assets of value, they could be used as collateral for either a traditional or high-risk asset-based lending program. Such assets include, but aren’t limited to, accounts receivables, equipment, real estate, cars, artwork, jewelry, and inventory.

The traditional asset-based lending program would structure out a longer payback term with traditional low cost for capital rates. Whereas high-risk asset-based lending programs would be shorter in term, usually under nine months, with much higher borrowing costs. Both programs, however, are options to use during your seasonal time period if you have pre-owned assets that qualify.

Lenders usually lend based on about 60% to 75% of the loan-to-value (LTV) of the assets. The LTV of an asset represents the estimated amount that the lender could sell it for within about a three-month time period, should the borrower default on the obligation.

Accounts Receivable Factoring

If you have outstanding commercial invoices for which you are waiting to get paid within the next 10 to 90 days, you could use non-recourse accounts receivable factoring to obtain an advance on those outstanding receivables for working capital during the seasonal period.

The factoring company would purchase the outstanding receivables, then advance around 80% of them back to you for working capital usage. Once your clients complete payment in 10 to 90 days, the lender would provide the remaining 20% of the receivables to you, minus a discount fee. Approval is weighed more heavily on the credit quality of your clientele, rather than on your current credit standing.

Purchase Order Financing

You could use this product to help purchase the items, supplies, materials, and inventory needed to fulfill orders during the upcoming busy season. The funder would provide payment to your supplier directly for the materials needed to complete an order. Once materials are received, the product is rendered, and payment is collected from your customers, the funder would be paid from a portion of revenues, including a discount fee for the financing arrangement.

Equipment Leasing

You might need to pick up some new equipment to use during the seasonal period, but not have the amount of capital in savings to purchase outright. In this type of situation, equipment leasing can be an option. You could choose lease programs that include a true lease in which you utilize the equipment during the rental period and return at the end, or other types of leasing programs that include buyouts of the equipment after the rental period for as low as $1.

Real Estate Hard Money

Maybe you’re seeking to complete some “fix/flip” projects this summer to cash in on profitable real estate deals. If so, you could use what’s known as real estate hard money programs to help finance the projects. These are short-term loans, usually under one year, in which the hard money lender usually provides a loan based on about 65% of the LTV of the property in question.

The approval is weighed more on the value of the property, along with the fix/flip project blueprint, rather than the current credit standing of the borrower. Most properties can be financed, except those that are owner-occupied.

You’ll need to be wary of the cost of these loans, as they carry high interest rates that are generally higher than subprime loans.

The Final Word

No matter if the upcoming summer season creates a busy or slow period. As long as you don’t take the ostrich approach by putting your head in the sand and ignoring the impact—positive or negative—of said season, you can make the strategic operational changes ahead of time in anticipation. Consider these creative working capital options for your commercial pursuits this summer.

Craving more summertime tips? Check out How to Prep Your Business for the Summer Rush … or the Summer Slump