An article posted in today's New York Times reported that, as of April, 59 percent of America's small firms relied on credit cards to help finance their day-to-day operations, up from 44 percent at the end of last year. Because credit card terms have worsened recently, it makes sense to find other forms of financing than credit cards. 

One innovative new company that provides financing for small businesses, OnDeck Capital, offers loans up to $100,000 based on a business's cash flow and/or credit card transactions. OnDeck collects the loan repayments by automatically debiting your bank account for a small amount (typically $100) each day, assuring you won't get behind on loan payments.

OnDeck's small loans are easier to qualify for than a traditional loan and more quickly processed, but interest rates aren't low -- usually 18% to 20% -- and you still must have sufficient cash flow to repay them. One note of caution: OnDeck requires that business owners sign a personal guarantee, meaning your house, savings, and other assets are at risk if your business fails while you still owe them money and you don't have the cash to pay it. But definitely worth a look -- they're at www.ondeckcapital.com.

To learn more about raising capital for your business, see Nolo's Business Financing, Loans & Capital area.

When a downturn hits and small businesses have to cut costs to survive, many small businesses trim everything but their core competencies. They cut all research and development and put the brakes on the very projects that they were started to diversify the company's revenue streams and grow it in ways to help it survive. Here's a blog post from HarvardBusiness.org by Freek Vermeulen, asserting that companies are better off exploring new sources of income and experimenting with innovative ideas, two ideas we talk about in our new book on saving your business. One idea we suggested is to reap the benefits of an employee brainstorm by asking employees to write a "5/15" report -- a report with employees' suggestions for improving the bottom line, that takes no more than 15 minutes to write and 5 minutes to read. Another idea that Freek talks about is to look for innovative ideas in the ways people have changed their shopping habits to save money (for example, resurfacing kitchen cabinets instead of buying new ones).

To learn more about helping your business survive the challenges of recession, see Save Your Small Business, by Ralph Warner and Bethany Laurence (Nolo).

Dovetailing with last week's post on cutting costs by doing everything short of layoffs -- such as cutting salaries, shortening the work week, and eliminating nonessential benefits -- is the idea of putting employees on furlough. However, according to a recent article in the New York Times last week, furloughs can end up costing more money than they save, because you still have to pay out benefits to furloughed employees and overhead on their work space and equipment. Plus, productivity and morale both suffer. Think twice, and read this article, before you try a temporary furlough.