Qualifying for a loan can be difficult for entrepreneurs who have poor credit history. Luckily, there are quite a few alternative methods to attain financing for your small business, aside from the traditional bank loan.
If you’ve heard of merchant cash advances, you know that they work by supplying small businesses with a lump sum of cash in return for a percentage of daily credit card sales, until the lump sum is finally paid in full. The main thing to keep in mind is that interest rates tend to be quite high for this type of small business funding, since they are often given to people who have no or poor credit history (and thus involve more risk). Even so, they can still be an option to consider, depending on your business’s situation and your financial history.
Here are some things to know about merchant cash advances:
1. No Collateral Required – At a traditional bank, you will be highly unlikely to qualify for a small business loan without collateral or with a low credit score. Merchant cash advance providers, on the other hand, do not require as much proof in order to supply you with the finances you need. As long as you can tolerate the higher interest rates on merchant cash advances, you should consider them as an alternative option.
2. Quicker Approval and Immediate Cash – This is especially important for businesses that have just endured an unexpected blow, such as a sudden plunge in the stock market or even natural disaster. With minimal paperwork, merchant cash advances are a good tool to help your business get back on its feet and running as efficiently as before. The approval process does not take nearly as long, and you can get money right away to meet your small business’s financing needs. Advances are particularly helpful for businesses that require an immediate influx of cash — perhaps to meet suddenly skyrocketing demands, or to take on a new project. Whatever the case may be, merchant cash advances will provide small businesses with immediate financing.
3. Revenue-Based Payments – This is perhaps the main difference that separates traditional bank loans from merchant cash advances. While banks will require monthly payments of a predetermined amount, merchant cash advances will collect a specified percentage of the business’s gross sales. For example, if your business has been doing particularly well one month, you can pay back more of the loan that month. If your business has a sales month that is worse than usual, you won’t be required to pay as much back to the merchant cash advance provider that month.
Confused by all the loan options at your fingertips? Never fear, Biz2Credit (www.biz2credit.com) can help you figure out the best solution for your small business. Loan specialists are here to navigate you through the array of options and help you pick the one most suitable. Visit the website or call (877) 861-2210 for assistance.