Merchant Cash Advance VS Small Business Loan

Together with the surge of mushrooming small businesses was the rise in the need for funding. To answer this need, financial services have been offered by various lending companies and financial institutions. The best thing about the huge competition on the side of these lenders is that they are continually devising ways to make things better and better for the entrepreneurs, coming up with innovative solutions. Two financial services that this article tries to look into are the small business loan versus the merchant cash advance.

In the past, traditional small business loans were the answer to the need for funds of an entrepreneur. Today, many forms of funding have evolved into more sophisticated models that have integrated ease and speed in acquisition. A merchant cash advance is one of these innovations in financial services. Let us take a look into the features of each to be able to distinguish which money source is right for our entrepreneurial and financial needs.

Among the common requirements posed when applying for a small business loan is that the possible borrower must have a good credit history and that the business should have been operating for a certain number of years. With most banks, you may have to put up your physical assets as security in order to receive the needed small business loan. The majority of application for such traditional means of funding has a higher probability to get declined. In the application process, the submission of paperwork alone could take from 1-4 weeks. If you have a good credit standing and are approved of a small business loan, it could take somewhere from 4-8 weeks before your money is released. Repayment terms are done on a fixed monthly basis and failure to comply with this may result to default of the small business loan.

Merchant cash advance, on the other hand, boasts of an incredible 90% and higher rate of approval as the lending company evaluates not the credit history of the borrower but ability of the business to procure future credit card sales. With lesser requirements to meet, the application process is a lot faster than that with getting a small business loan and within an average of 24 to 72 hours the applicant will already know the response of the lending company. Once approved, funds can be made available in less than seven days. Unlike small business loans, repayment for merchant cash advance is taken by percentage of future credit card sales until the borrowed amount is fully paid.

By comparison, the merchant cash advance obviously outshines the small business cash advance in both ease and speed in acquisition.

Top 5 Considerations – Startup Business Loans

If you want to start your own company it will take a little money to get started and on your feet. Banks put many things into consideration when you ask them for money for startup business loans. Here are five of the most important considerations when you want money from a bank for a loan for your new company.

1. When you want to get money from a bank the first thing they will consider with startup business loans is your credit. You should have a healthy credit score that looks great. If your credit is bad it tells a lender that you do not repay your debts and this may stop you from getting a line of credit.

2. Experience is a big factor when you are hoping for startup business loans. You should have years of experience in the line of work you want to start your own business and you should be able to convince the bank you are the right person to open the company. A bank may think you have the best idea ever but if they do not think you are skilled enough for the company to generate revenue or to manage the business they will not lend you any money.

3. Assets are another factor that lenders want to see. When you are trying to secure startup business loans you should have some assets worth money that the bank can secure if they feel they need it. If you have nothing worth any value and you are asking for money to begin your own business you will probably be turned away. Banks want to see you are serious and when you secure assets with the money they know you are.

4. Gather some money down for the startup business loans. The best way to show a lender that you are serious about your new company is by having a healthy chunk of money as a down payment. When you have 20% to 25% down payment for your startup business a bank is more willing to talk to you. A good size down payment may even make a bank look past your bad credit.

5. If all of the factors above do not fall in your favor you might try and find someone who can co-sign a loan with you. A lender will want to know if you have someone who will back you that you are good for the money. This person will need to have good credit but they can be considered as a silent partner in your endeavors. In most cases a friend or family member is the best person to ask to cosign startup business loans.

If you are looking for money for startup business loans you should consider many things. A bank will want to know that you are financially in a good position, qualified to run the business, why the business will do well and many more things. Securing a loan is important but you may need a down payment, good credit, assets, or even a co-signer.

Apply for Small Business Loan: Information About Various Online Funding Options for Small Companies

Learning how to apply for a small business loan can be difficult – even if you want to apply online. Different lenders ask for information in different ways, but having an idea of what they’ll likely ask for so that you can prepare is a step in the right direction. Every lender wants to see your company’s financial statements and your own credit report. It helps to have a detailed analysis of how you plan to spend the money you are requesting to loan as well.

Regardless of anything, the longer you’ve been in business and the better your credit score, the more loans will be available to you, and the easier it will be to apply and be approved. If you have poor credit history or only little credit history, you will want to look into short-term loans.They are set up similarly to medium-term loans, except that they are shorter and offer smaller amounts of capital. You will be expected to pay it back over a short term, usually from 3 to 18 months.

Hopefully, you’ll be able to pay it all back within a short period. Like with larger loans, you’ll be expected to demonstrate that your business plan will be good enough to guarantee profits. The good news about short-term loans is that the qualification process is less difficult so you’ll have a better chance of approval. Just keep in mind that the interest rate will probably be higher if your credit isn’t great.

If you’re just starting out, you might also want to look into start-up loans. These can have interest rates ranging from 7% to 30%, with terms from one to five years. To apply for small business loan for a start-up, check with private lenders. A start-up loan might also serve as a precursor to seeking extra funding from venture capital groups or “angel investors”. If you can create a really unique, attractive marketing plan, consider crowd funding websites as well.

Reasons to Apply for Small Business Loan

When applying for small business loans from online lenders, you’ll probably be asked to select a reason why you need the money during the application process. Viable reasons include:

• Buying new or used equipment for your business

• Purchasing inventory to sell

• refinancing debt

• Hiring new employees

• Creating “bridge loan” for construction project

• For taxes

• Other reason

If you have another reason why you need money for your small business, you might be required to enter a specific reason. The more details you can give about your business plan and how exactly you are going to use the money, the better.

So, what website should you turn to if you want to apply for small business loan? It’s a good idea to start with US Business Funding. It’s Business Accredited with BBB and has 95% approval rates!