Merchant Cash Advance – The Business Loan Alternative

January 10, 2010 · Posted in Hard Money Loans · Comments Off 

The Capital Access Network recently surveyed 276 small business owners in the fields of restaurant/hospitality, health/medical, retail, service, etc, all of which accept specific credit cards within their businesses. 87% of the surveyed business owners feel that access to a readily available line of credit is important, especially in today’s economy. And although 76% of those business owners still feel that banks are one of the most trusted sources of capital, 42% feel that it is important to have a back up plan, in case the bank does not come through.

For a small business owner, there are many reasons why a bank would not approve a small business loan. These reasons may include poor personal credit history, low business cash flow and lack of collateral. A small business loan may also be denied if the business in question has not been in existence for three or more years. Therefore, a person who is just embarking upon his/her entrepreneurial journey, attempting to finance a startup business, is very likely to have difficulty finding a bank that will approve a loan. This has created a catch-22, producing a desire for alternative sources of small business financing.

87% of surveyed business owners who requested capital and were not provided these funds by their banks, stated that the banks did not offer an alternative method of funding, and 69% stated that they would consider an alternative had the bank proposed one.

Although many banks may not be offering alternative ways for small business owners to receive funds, there are other options. Many companies offer small business cash advances to business owners. A small business cash advance is similar to a loan, as owners are offered a large amount of money and required to pay it back to the lender. However, these cash advances are easier to obtain than bank loans. They have fewer requirements and utilize an automatic repayment plan where the lender deducts a percentage from each credit card sale until the cash advance is completely paid off.

These cash advances are specifically designed for small business owners who are unable to get approval for a bank loan, therefore providing the alternative that 69% of surveyed small business owners would have considered if offered.

According to a survey released by the Federal Reserve, many banks have admitted to tightening their lending practices over the past three months. Credit risks are increasing and the economy is weakening “…due to rising energy costs, turbulence in the secondary credit markets…and the anticipated impact of relaxed underwriting standards over the past few years…” sates the survey. The survey predicts these tightened practices to continue over the next year, possibly producing more potential seekers of small business cash advances.

Author: Gaston Castro
Article Source: EzineArticles.com
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Who Cannot Use the Business Loans Alternative?

November 29, 2009 · Posted in Hard Money Loans · Comments Off 

Business cash advances are a great alternative to the traditional business loan, but there are some small business owners who cannot take advantage of this method of business financing.

Home-Based Businesses

In order to qualify for an advance, the business loans alternative, a merchant must run his/her business out of a storefront/office. Why? Since merchant loans are unsecured and require no collateral, merchant cash advance providers are taking a big risk when they advance small business owners up to $500,000.

Merchants who operate from an office or store-front will usually have a business lease. A small business owner who is held to a lease is more likely to continue running his/her business until his/her advance is fully repaid.

Non-Merchant Businesses

One of the selling points of the business loans alternative is the flexible method in which it is repaid. Rather than requiring merchants to make monthly, out-of-pocket, fixed payments, providers deduct a small percentage from a business’s daily credit card sales. This procedure takes place for six to eight months, until the advance is repaid.

Non-merchant businesses who do not process credit card sales will not be able to partake in the repayment method that business cash advance providers use. Therefore, they are ineligible for advances.

Merchants with Unresolved Bankruptcies

Small business owners who receive merchant cash advances cannot have unresolved bankruptcies. Merchants who have filed for bankruptcy in the passed, but have resolved the issue may still be eligible for a business cash advance.

If you own a office/storefront business that processes credit card sales and you have no unresolved bankruptcies, the business loans alternative may be right for you. Get a free online quote today!

Author: Gaston Castro
Article Source: EzineArticles.com
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