Is your small business plagued with capital problems? Need a little extra cash to pay off those loans or purchase that extra equipment? Didn’t qualify for a loan from a bank? Luckily, there are short-term solutions to such problems. Read on to find out how you can pull your business out of a rut.
Merchant Cash Advance
Merchant cash advances can be extremely helpful for companies struggling with small business financing. The companies that offer these merchant cash advances provide funds with terms anywhere between 3 to 18 months. Payments are made based on your sales, so if business slows, the monetary amount of your payments may be smaller.
Merchant cash advances are usually used by small business owners who did not qualify for bank loans, and merchant cash advances tend to be more expensive than bank loans. However, competition has caused rates to fall and you can get your money in as little as 48 hours. Gibraltar Capital Advance, Retail Capital, and Pearl Capital are some examples of notable merchant cash advance companies.
There are many benefits of opting for merchant cash advances. In comparison to traditional bank loans, merchant cash advances require less paperwork and have higher approval rates. There are also no restrictions of what you use the money for, so you can use the funds in merchant cash advances for anything.
The Microloan Program was developed in 1992 by the SBA for the purpose of making available very small loans to small business owners. Nonprofit intermediaries are used to make the loans. The funds of a microloan can be used for many business needs, including capital, inventory, supplies, and equipment. The rate of a microloan is negotiable with the intermediary in question, but rates tend to be higher than those for standard small business loans. The range of microloans given out can be less than $100 to a maximum of $35,000. The average size of a microloan is $10,500. The maximum term of a microloan is six years.
Microloans are best for small businesses who need a small boost in cash. The nonprofit intermediaries who contribute to the Microloan Program are generally very knowledgeable about small businesses, and this could work to the benefit of new small business owners.
Invoice financing offers a simple solution for those small businesses whose clients do not pay on time. Invoice financing companies provide you with an advance on those invoices that are a little slower in being paid. The influx of immediate funds is convenient for small business owners who need to pay expenses or purchase things. The business’s cash flow becomes more predictable this way. Paragon Financial Group is one such company that provide invoice financing.
This article was submitted by Megan Zhang, freelance blogger and writer. She lives in New York City. Send all questions to email@example.com