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How to Get Unsecured Business Loans the Easy Way

In case your small business requires more financial backup, than what is being supplied via private credit cards or business credit lines, it can be obligatory to fulfill finance expenses in the course of a loan. Like any other type of financing, the payment schedule and debt structure will be hinged on the requirements of the financial provider, the credit history of the individual and their existing relationship with the money lender. Nevertheless, the primary decision that any small business owner must formulate, is whether to go for unsecured business loans or secured ones.

The unsecured business loans have an appealing lead over the secured loans. You need not require to put up any collateral, for instance, business pieces of equipment, inventories or properties, for obtaining financial help at all. This would mean that a lender will not be able to seize any assets directly if and when, the client fails to pay back the loan amount.

On the other hand, even supposing the unsecured business loans are not backed up by any collateral, there are a number of lenders who may still require you to sign up for a personal assurance.  Such a guarantee can give equip your lender with the power to come after your private assets, such as a home, cash, or a car to make payments on the loan, in case you are unable to pay the debt back.

The unsecured business loans are more likely to bear a higher yearly percentage rate, in comparison with the secured business loans; yet they come typically with a more rapid rate of funding.

Read More:Loans for Small Business Owners Through Merchant Cash Advance

What do unsecured business loans refer to?

For the business owners having a sturdy personal credit, the unsecured business loans can be a viable option, as they do not come with any collateral system. On the other hand, this kind of financing can represent more risks to the lenders. In case the borrower fails to pays, there can be no asset to take hold of. For this very reason, the unsecured business loans come with strict qualification standards and elevated interest rates on average. The traditional banks can also ask for a dissimilar security aspect as an alternative to such collateral, for example, a proportion of the credit card operations.

In case the client fails to pay back the unsecured business loans, the bank can pursue a legal battle against the individual, make use of a collection agency, or otherwise sell off the due debt to any third-party who comes after the individual. A number of unsecured business loans have need of a personal assurance, which means that the banks would be up to appropriating the assets, in case your business fails to pay off the loan sum. This choice is best for the small business owners who could do with large sums of cash at a quick disposal of time, and look ahead to pay it back in a small time.

Pros of taking up unsecured business loans:

Dissimilar from the secured business loans, the unsecured business loans are not contained by the worth of the underlying asset. An absence of collateral can also bypass the lengthy appraisal procedures, which can get the client the much-needed ready money at a quicker pace. What’s more, in the event that a client’s company files for economic failure, the unsecured business loans have the likelihood to get forgiven.

Cons of taking up unsecured business loans:

The unsecured business loans financing is characteristically more costly and often comes geared with short periods of repayment. It is also much more difficult to qualify. The lenders will call for knowing whether or not a given company has been in operation for more than a few years with sturdy revenues or optimistic cash flow. It is also inquired whether the applicant has a first-rate individual credit history. Failure to pay on the unsecured business loans could refer to a financial ruin and damage the credit score for both the company and its proprietor.

How to get your unsecured business loans Easily and Quickly?

With the use of cash advances via the providers of merchant cash advance, each and every business can have the opportunity for getting the loan amount that is required urgently. Different from the traditional bank loan sources, the loans provided by merchant cash advance can make the obligatory help available, which is called for exclusive of making the small business company wait for a series of months. Any business owner can get this funding for covering the expenses of running a company and is an easy option to achieve for getting due unsecured business loans, in place of waiting to get due approval from a traditional bank source.

An overall explanation of the merchant cash advance system:

Merchant cash advances are deemed to be one of the best alternative lending opportunities, with most others in the grouping of being business lines of credit, equipment financing, invoice financing, working capital loans, and short-term business loans. Merchant cash advance depends on the upcoming earnings and sales conditional on the agreed-upon percentage risk among the business entrepreneur and the MCA provider on the overall credit sales. In short, these are fast options for business loans that invest in the upcoming business credit sales.

In the present day, most business merchants have started looking for other viable ways for avoiding the traditional bank loan systems, which tend to hassle a company and instead, boost up their unsecured business loans. As a result of the loan payments in merchant cash advance, which are paid out from the credit sales entirely, the business has to simply agree to the debit or credit cards during any given transaction.

Regardless of the poor debt records of any business owner, he or she can still eligible be to apply for the loans. Such loans can be made use of, for the expansion of a business or for replacing any vital equipment that unexpectedly expired. The best advantage of a merchant cash advance is that you can still get fast business lending, which will not call for weeks running to the bank and deal with heaps of paperwork.

The merchant cash advance system has a high rate of interest. They are regarded as non-strict loans since they are provided for the businesses having the apt sum of revenue that it can possibly generate. This can secure the payment plans for the loans. Although the growing interest is big, the repayment method is spread out over a sustainable period. The period for payment between the patrons will be decided upon, after due discussion and subsequent to linking with the sources of funding.

Where can one take up a Merchant Cash Advance?

MCA or merchant cash advances are given out by providers of merchant cash advance. Typically, MCA providers have a prior relationship with the partnered credit card processors. In actual fact, a quantity of credit card processors offers merchant cash advances as well.

When seeking a merchant cash advances, it is essential to review all the advanced options, which are many. At this time there is a likely $3 billion in merchant cash advance funding among the small businesses.

Read More:The Best Bad Credit Loans for Small Businesses of 2018

What other things should you Know About Merchant Cash Advance Unsecured Business Loans?

There can be a large array of things that is to be known about merchant cash advance unsecured business loans. Yet, many businesses wish to know more on the subject, to deem whether they have made the correct choice for dealing with their lending needs. In short, such judiciousness is highly advantageous and MCA can, in fact, provide a brilliant option for getting unsecured business loans.

They are an advantageous loan system to have admittance to and which, you can easily use for covering all the needful. They make the user available with the best funding option that they would need, along with having many advantages and almost zero downfalls. This is an ideal kind of funding source for any business person. It is even a no-hassle and an easy procedure that makes the obtaining of unsecured business loans much easier.

Bottom Line

In times of financial difficulty, you need not go through the hard path any longer, for obtaining a decent financing. Just sign up for your unsecured business loans right now, and get connected with the lenders who are up to providing you with all the needful funding for your business. You can be much more positive about the way that costs are to be covered.

Merchant cash advance unsecured business loans have all the benefits, which any small business owner is looking for. You can gain from what the system has to give, as well.

The monetary challenges faced by most small business owners can be easily dealt with by applying for such merchant cash advance unsecured business loans. Merchant cash advance is a prompt means for the addressing such requirements, in addition to the application procedure being less severe and rather simple for the interested party. It is up to you to make the first move and get your quick fix now!

Published inPBC Blog

How Businesses are Obtaining Their Machinery Finance

Financing any part of a business is daunting, especially when it comes to having no one to turn too. There are many reasons why a lot of options would not cover you when it comes to borrowing from them.

When you know the options for the machinery finance, you’re better able to take advantage of what is out there. You do not want to find yourself searching for the best way to finance the business that you’re running and not knowing who to turn too. Every business and person’s situation is different, which is why it is important to consider what options are best based on the situation.

Every business looking for machinery finance has made their top choice on which option they prefer over the others, but you make your own.

Read More:Merchant Cash Advance and the Quest for Alternative Business Finance

Investors in the Business

Investors are not only one of the hardest people to get on board with your business if you do not have any, but if you have some then they might have already felt like they have invested enough into the business. While machinery finance is great to have, it might not be something that investors are interested in, depending on the numbers you’re seeing for profits. You have to give them something worthwhile.

Investors are great if you don’t want to jump through hoops with a credit check if you don’t want to worry about being denied and so on. They are there to help the business continue to grow. However, for smaller businesses or those that do not have investors; this would be much more difficult to obtain an investor to work in the first place, which is not always ideal.

Investors are less likely to be used by businesses seeking machinery finance over other forms of financial choices.

Small Business Loans

Small business loans are loans that can be obtained through institutes, credit unions or traditional banks. These banks are ideal to work with when it comes to obtaining financing in a secure way that is easily verifiable and it might be required in the business that you own, but this is something that you should consider and lookup depending on the business.

They are, however, harder to obtain since you have to have a great credit history and score, you have to have a long-standing business in the right industry and you have to let them know what you want the loan for, machinery finance and all. You need to make sure that you put in all of the application information and the documentation that is requested.

When it comes to using small business loans, not many people choose to use these because they’re much harder to get your hands on and they require much more from the business owner than what they actually have.

Sometimes they may not qualify for these loans at all, which brings many businesses looking towards other options that are out there for them to make use of.

Grants or Government Funds

Another option for getting the funds that are needed for the machinery finance they need is through government funds or grants. These are usually extremely hard to get since they require the business to go through a lot in order to qualify for them. Additionally, the person will have to provide an extremely large amount of proof to ensure that they are not lying on their application. Another big thing is that they have to qualify under the right industry, so when looking for machinery finance, if they don’t cover it, they won’t cover you.

This is a lot of work that a lot of companies do not want to do when it comes to just grabbing some cash for machinery finance and being able to get what they need when the time comes. Of course, there is always another choice when the first three do not pan out for the business and the next one does not require so many rules.

Merchant Cash Advances

Merchant cash advances are used by businesses everywhere, even those that are looking for machinery finance. With their help, you can ensure that you’re obtaining the financing that you need from a reputable provider.

The company does not need to be in business for years and they do not have to worry about their credit scores or history. They will loan to the person and ensure that they get what they need when it comes to covering the machinery finance or any other finance that they need to have covered because merchant cash advances are for everyone.

They only ask that the business be in business for 6 months or more and have steady revenue coming in every month. This is to ensure that the company has the funds to pay back the amount that they are lent.

They do not care what the cash is used for, whether it is for machinery finance or not. They have you covered from start to finish.

Machinery Finance Operators Choosing MCA’s

With the shift in the financial world, so many more businesses are now choosing to go with merchant cash advances because they provide the ability to borrow without having to worry about not qualifying for being denied. They’re much easier to obtain and they take a much lesser amount of time.

When once businesses would have to wait weeks to months to obtain the business loans they wanted, machinery finance and all, even for smaller amounts, the cash advances made it so that they could obtain the same amount of cash for the same reason in just a weeks time or less.

This prompted many companies to make the switch to something that was actually going to provide them with the cash they needed when they needed it. Long gone were the days of sitting in the stuffy offices waiting for the cash to come in or to be denied. These businesses collected the cash, did what they had to do with it and were able to build their business in a quicker amount of time.

No games played, no extensive questions asked in the process…

How Quick is Quick in the Merchant Cash Advance World?

When it comes to quick cash, you would think that there is really no such thing, but that is not the case when it comes to a merchant cash advance. A cash advance does provide the business with a way to obtain quick cash when it is needed. When this happens, it is important to think about how this money can be used within the business to benefit it.

Quick is not what the banks out there provide, so this is something to think about since you want to make sure that you’re obtaining the right help in your time of need. With the cash advance that is given to you within a week, this is pretty fast cash and one of the biggest reasons why so many businesses are staying away from the traditional bank loans out there that are taking far too long to provide the business with the check needed.

When the time comes, it is important to think about the cash advance world and all that comes with it. When it comes down to getting the most out of what is being provided, you can be sure that they’re providing you with the best and nothing less. Take your time to find out if the cash advance is the right choice for you to make for your business. It might be if you need quick cash right now.

Read More: Boost for Alternative Lending Market

The Process is Simple

You just need to go through four simple steps and you’re well on your way to cashing out on the extras that come with the cash advance loans out there. Never worry about not being able to borrow from them again either, since you can borrow as many times as you like once you pay off the first advance.

1. Go online and sign up to obtain the loan that you would like to have

2.    Accept the terms and agreement that they send to you through email, including the amount, interest and percentage took from payments to your business

3.    Send the documents and acceptance letter back to the advance provider so that they can process and approve the application

4.    The advance will be sent to the business bank account that was provided within 72 hours of sending the documents in for review.

The entire process from start to finish only takes around a week, which is always a good thing to think about when it comes to cashing out on some great benefits and all that comes with having the financing needed for your company. Cash advances have you covered.

Published inPBC Blog

Hotel Construction Financing Options for Construction Businesses

The real estate markets have been showing signs of recovery. This comes after more than two years of what has been described as acute tightening. Some time since the economic strangulations in the country in which there was a general decline in real estate lending, and especially in the area of hotel construction financing.

In recent times, however, hotel owners have witnessed a renewed interest in hotel investment in the area of construction loans.  In the same vein, there has been an increase in the number of loan applications, suggesting that investors are having a feeling that the time is right to go back into the hotel construction financing market. The hotel lending market is currently different from what it used to be. At the moment most hotel lenders will typically insist on a down payment of about 25 to 40 percent before a loan is issued in the first place. This is a huge deviation from the 10 to 20 percent which it used to be in the past.

There is something else that is quite troubling about construction lending for hotels. Since the end of the economic recession, there has been a general decrease in bank lending to small businesses. This is quite disturbing because banks have been the leading providers of credit to small and medium-sized businesses. But there has been a decrease in overall bank lending to small business by around 20 percent, and ironically there was a reported increase in lending to huge firms by around 7 percent. This means that the determining factor of whether or not a hotel is going receive hotel construction financing has much to do with its size.

Decline in hotel construction financing from commercial banks

The situation in the construction is even more alarming. As far back as the early part of 2009, it was recorded that both local and regional banks were responsible for origination more than 65 percent of all the hotel loans in the country. Shockingly, that figure has fallen to somewhere around 37 percent. The result of this has been that national lenders are realizing that both small and sophisticated borrowers are turning to the so-called alternative lending institutions. The question of what happened to bank loans is one that cannot be answered easily; but, on a general note, it can be said that regulations—from both the federal and state levels— have become more stringent, ensuring that hotels do not meet the requirements for hotel construction financing.

Read More:Commercial Lending and the Future of Merchant Cash Advance

SBA loans and Loans from Insurance Companies

In the wake of the current economic recovery, other companies such as insurance companies are beginning to beam their searchlights on the hotel construction industry. Insurance companies, in particular, feel that since the bottom of the recession has passed that it is time to start financing hotels again. The government which had been committed to hotel construction financing, especially when it has to with the small ones, has also sought to revive its SBA program which had an internal program that was suited to the need of hotels. For instance, the small business administration 504 program which had almost gone into extinction is being revived, with the government setting up a program to enable a better secondary market for the front side of the SBA 504 loan.

The federal government through the small business administration is already providing some guarantees for investors who would buy pools of the first liens in the 504 loan program. It is expected that with this intervention of the government that hotel construction financing will become more available to hotel owners and developers as the risks the lenders face are substantially reduced with the adoption of the SBA loan program. In spite of all these efforts, hotel financing is still not available to hotel owners hence the need for alternative sources such as merchant cash advance.

What exactly is a merchant cash advance?

Merchant Cash advance by its very nature is not a loan of some sort; rather it can be viewed as a commercial transaction between a business—in this case, a hotel—and a merchant cash advance provider in which the business agrees to sell a portion of its future receivables to the merchant cash lender in exchange for a lump sum of cash.

Owing to the fact that a merchant cash advance is not a loan in the traditional sense of the word it does not attract interest payments. A merchant cash advance is a lending alternative that is best suited for high revenue generating businesses of which the hotel business is a typical example. A merchant cash advance, although not suited for certain forms of businesses such as those that are online based, can serve several purposes for a business.

It can be used to generate working capital, fulfill payroll obligations, purchase equipment, and even for construction. If for example hotel construction financing probably to renovate a hotel, or for an already existing hotel to finance the building of a new branch, a merchant cash advance might as well be the optimal choice for the funding. The reason for this is that it removes all of the hassles associated with bank loans, and also the risks tied to online lending.

The major advantages of merchant cash advance over mainly bank loans as a source of construction finance is something that shall subsequently be discussed in detail. For now, let us take a look at what events would occur when a hotel approaches a merchant cash advance provider for hotel construction financing.

What does construction financing through merchant cash advance really involve?

Once a hotel owner makes known his intention to obtain funding for a construction project to the merchant cash advance provider, preparations are made for the eventual signing of the merchant cash advance agreement which is a legally binding document that entitles the merchant vendor to a share of the revenue of the business, which is used to gradually offset the loan.

The merchant cash advance agreement would typically contain details of the factor rate, withholding amount and well as the total payable amount. The factor rate is a figure that is usually less than 1.5 that is used to account for the fact that the amount which is given to the business for the hotel construction financing at the present would be worth more than that in the future. What this means is that the sale of the future receivables of the business is done at a discounted rate.

In order for this payment to be made, a fixed percentage or amount of the daily credit card sales of the hotel owner (of course, in the case of merchant cash advance, hotel construction financing has to be obtained for renovation of existing hotels, or building of another outlet, or by a business owner that is seeking to branch out into the hotel business) is deducted on a daily basis to pay back the loan.

The amount or percentage that is decided upon usually depends on a number of factors. One of the major factors that are considered is the volume of revenue that the borrower is making from his current business. Because the amount involved in hotel construction could be sometimes, and because merchant cash advance providers would typically give a business a cash advance equal to about 50 percent of its monthly revenue, a business has to be making enough from credit sales to be able to qualify for hotel construction financing.

Once an agreement has been reached on the withholding amount, then the payments are made on a daily basis until the advance has been repaid. In most cases, the advance is expected to be repaid over a period of 18 months or less. As such only business owners generating so much in terms of sales can be eligible for merchant cash advance for the purpose of hotel construction.

Read More: The Alternative Finance Market: What is out there for small companies?

Benefits of obtaining hotel construction financing from merchant cash provider

Obtaining hotel construction financing through merchant cash advance has some significant benefits. Quite a few people are aware of the rigorous and lengthy process of obtaining construction loans from commercial banks.  The entire process could take several months and is not without financial costs. But for a merchant cash advance, the process could be completed in a matter of days and the cash made available to the business owner. This is because a large amount of documentation required for processing a bank loan is not all needed in an MCA application; only a few documents such as financial statements for the previous couple of months and other minor documents are required.

Apart from the fact, the whole process is so quick; there is also no collateral requirement. Yes, merchant cash advance regardless of whether it is needed for hotel construction financing or not is usually unsecured, meaning that only the merchant vendors bear the risk involved. And, if the business owner is unable to repay the advance the lender can make no claims against him.

In addition, it is not required for a business to have an excellent credit score—as banks often require—in order to be eligible for construction financing. However, there is still a minimum score which varies from provider to provider, although generally less than what banks or other traditional lenders would require.

Finally, although it is somewhat more expensive to seek hotel construction financing from merchant cash advance providers. The reality of it all is that since merchant cash advances are totally unsecured their cost is justifiable. Meanwhile, if one is to consider other benefits, then it is quite clear that merchant cash advance provides value that probably exceeds its cost. All said and done small business owners whether in the hotel industry or not are already beginning to acknowledge merchant cash advance as a ready alternative to commercial bank loans.

Published inPBC Blog

Small Business Loans for Restaurants Through MCA Providers

A restaurant is one of the easiest and most profitable businesses to own on the market. Not only can you open up something small and quaint, but you have the ability to make it into a chain if it works out well. Many restaurant owners are striving to make a change in the way they do business, as well as who they borrow from to keep their business afloat, merchant cash advances seem to be the option that most restaurants have been choosing.

The Options for Small Business Loans for Restaurants

There are numerous funding options for restaurants out there, but which ones provide the best funding is up for debate. Many restaurants and other small businesses are currently opting for merchant cash advance lenders over the other options.

Here are some of the options on the market that a restaurant should be aware of when trying to secure funding for their business:

SBA Loans - While these loans are extremely helpful, they’re also one of the hardest loans to obtain. You have to have an almost perfect credit score, be able to provide proof of the business and you must have been in business for some time.

MCA providers - MCA providers are more lenient when it comes to borrowing money from them. They require that a business earn income steadily but only have to have been in business for at least 6 months. They also do not require a perfect credit score, which is one of the biggest reasons small businesses love merchant cash advances.

Grants - Depending on where you’re opening and what you’re doing for your small business, there are grants that help the user gain a bit more financial funding when it is needed to open or keep the business running.

Investors - Investors are hard to find and when you do find them, oftentimes you have to sell them your soul for them to give you the amount you need. Generally, startups have found other ways to get the cash they need but investors are still an option that can be used.

Of course, some small business owners prefer to ask family and friends that might have the cash or use their personal savings funds, IRA or retirement fund to open the business. The sky's the limit when obtaining funding for any small business, including a restaurant.

Read More: Merchant Cash Advance and the Quest for Alternative Business Finance

Restaurants are Choosing MCA Providers

Restaurants are choosing to work with MCA providers for many reasons. Not only are the benefits the best out there, but they’re much easier to obtain. Waiting months for the bank to respond back to you regarding small business loans for restaurants is not how anyone wants to spend their time. Not to mention the fact that if you need the money now, not later, the bank loan is not going to help.

Here are the benefits that restaurants are obtaining from MCA providers that they work with:

Easily obtain funding within a week

Ask any and all questions you have regarding the funding up front

Have a less than perfect credit history

Have been in business for just 6 months

Need a smaller amount of money

Businesses in need of regular loans

MCA providers are providing even more benefits for those businesses finding it hard to obtain funding from anywhere else. With the use of the MCA, they’re able to get back on their feet and not have to worry about having to run around and find someone willing to lend them money needed. The best part is that small business loans for restaurants can easily be obtained through cash advance providers again and again.

Benefiting from Merchant Cash Advances

If you’re a restaurant or other small business, then you want to find out if you benefit from cash advances. Not everyone is up to speed with what they are and how exactly they’re able to help your company overall. When in need of small business loans for restaurants, MCA providers have been helping for years.

1.      Any business in need of emergency funding can benefit from the use of a merchant cash advance, as their methods provide the user with cash, in hand, within a week from applying for the loan. It is easy and efficient.

2.      The business has a lot of financial fluctuations that are not always accounted for. When this happens, it is important to think about ways that this can be maintained while borrowing money. Cash advances work with you, even when these fluctuations happen, as long as the business continues to make money.

3.      Those businesses with low credit scores are ones that often benefit from using cash advances. They do not have a strong need to have someone with perfect credit borrowing from them. As long as your business is in good standing, they are okay with allowing you to borrow from them.

4.      Working in a high risk industry may lead many businesses to turn to a merchant cash advance because of the ease of use and availability of them. They work with many businesses and are highly unlikely to turn anyone down for a loan when it is needed.

5.      Those businesses that take out loans regularly will benefit greatly from using the MCA lender. The MCA lenders continuously provide funding to those that have a great standing with them, businesses then are able to request funding every time they need one. They’re accepted and have a steady stream of ways to obtain funding.

So many businesses are finding that cash advances are currently the way to go when seeking ways to obtain small business loans for restaurants. These loans can be gotten from a number of sources but with the financial industry the way that it is, it is hard to keep the business running smoothly.

The MCA Process is a Simple One

The process for small business loans for restaurants through an MCA lender is simple. Just visiting a website is all that needs to be done. Applying for the lending that is required is always a good thing since you want to ensure that you’re doing what needs to be done and that the lender has the information needed to process your application.

1.      Fill out the application that is on the website with your information and that of your business.

2.      The lender contacts you regarding your application, the terms and paperwork required to finalize the advance.

3.      You provide the paperwork and accept the terms to work with the lender.

4.      The lender provides you with a wire transfer of the funds requested to your business account within 72 hours.

The entire process of obtaining a merchant cash advance from a lender is no more than a week from start to finish. They provide one of the easiest ways to obtain lending, so you do not have to fight with a traditional bank for small business loans for restaurants. You have a way to obtain the funding you need.

Those that have never used MCA providers previously are delightfully surprised to find out just how easy this funding is to obtain. Take a chance to try the advances out for yourself to see what they have to provide you with. Now is the chance to take the next step and further your career. The small business loans for restaurants can be found in many places, but the right one is the one you need to benefit your restaurant and ensure that you have the money when you need it, not a month or so from when you don’t.

Merchant cash advance lenders cut the waiting time down, cut out the middleman and provide you with the cash needed to keep your business afloat. Small business loans for restaurants should not be that hard to obtain, but with the world we live in now, many banks and other financial institutions do not take any risks.

Merchant cash advances want to work with you on the small business loans for restaurants that you need. All you need to do to learn more is email or call them today. They’re always happy to answer any and all questions prospective borrowers have regarding the funding that they provide to those searching for help.

Read More: Small Business Financing Trends to Stay Abreast Of

Apply for a Merchant Cash Advance Today

If you are ready to obtain small business loans for restaurants and want to consider funding through a merchant cash advance, we are here to provide the necessary help that is required. You never have to worry about your business not being able to have the funding needed to keep running, as these merchant cash advances provide multiple businesses everywhere with a chance to have the funding they need to keep running without having to wait for months to obtain it.

Always go with a cash advance in a time of need. The other options will not provide the small business loans for restaurants that you seek, they will only suppress you and provide you with funding once you no longer need it. Streamline the process and apply for a cash advance through a lender today. You will be happy with the results provided.

Published inPBC Blog

Best Retail Finance Options for Small Businesses

The amount a small business will need in terms of working capital depends on the nature of its business, the challenge at hand and other factors.  In most cases, small businesses often require short-term financing in order to meet up with various obligations such as payroll, equipment purchase, or even expansion. Short term finance otherwise known as retail finance is often what is required in these scenarios. There are various sources of small business finance and learning how each would impact the business could enable small business owners to make informed decisions. Some of these sources include trade credit cash credit, bank loans, and overdrafts, all of which fall under the umbrella of bank credit. Of course, there are also nontraditional sources of business finance for small businesses. Some of these include invoice factoring, online lending, and the very popular one—merchant cash advance, or cash advance for short. It is the purpose of this article to examine all of these sources of retail finance with a view to finding which one of them could be most valuable to a small businesses that are in dire need of cash, as well as those who would not ordinarily qualify for traditional business financing as a result of poor credit score, inability to provide collateral, and other factors.

Read More: Loans for Small Business Owners Through Merchant Cash Advance

Why do Small Businesses Often Require Short-Term Financing

Before taking a look at the various sources of small business funding, it is important that one understands in detail what purpose retail finance serves.  One major reason why small businesses require short-term business funding is that they need to meet up with day to day activities, enabling a business to be run smoothly. One other equally important reason is that it enables the business to hold stock of raw materials as well as finished products.  Furthermore, it is only a business that has ready access to credit facilities that can sell goods on credit to customers. This is because it is not often possible for a business to know the exact time a customer who has purchased goods on credit will repay. So it behooves a business to find a good source of retail finance in order to keep up with production during the time debts are being recovered from customers. Most small businesses would also require short loans of some sort if there is a need to increase the volume of production over a short period of time. One reason a business could need this expansion is if it wishes to take advantage of a particular opportunity which has necessitated a much higher demand for its products, especially when it cannot obtain the money required for this from within the business. Lastly, retail finance might be required in order for a business to have funds available during its working cycle. The working cycle of a business is that time between when the production of a particular product begins and when it is sold. Having said that let us take a look at some of the most common sources of short-term business financing.

Some of the Most Popular Sources of Small Business Funding

Bank Credit

The most popular source of retail finance and indeed any other sort of business finance is the commercial bank. Commercial banks have been known to grant short-term business loans in the form of bank credits. Bank credit is simply the umbrella term for loans, overdraft, cash accredit, as well as discounted bills which a business could obtain from a commercial bank. Bank credits might be such that a business obtains the fund fully in a single instance; it could also be such that a business draws on it when and as needed. The most popular form of bank credit is a loan which is advance that a bank issue to a business and which it is expected to pay back after some specific period. The business which obtains a bank loan is typically required to pay interest on the whole amount; and often times, the bank could make the first monthly deduction from the loan amount. There are lots of things a bank considers before issuing retail finance to a business. One of those things is collateral and the other is the financial strength of the business which helps the bank to determine whether or not the business would be able to meet up with monthly payments after carrying out its routine expenses.

Banks also give cash credits to small businesses under certain circumstances. A cash credit can be seen as an arrangement between a bank and business in which the business is allowed to withdraw cash up to a certain limit. This specified limit is technically known as the cash credit limit. In most cases the limit is granted for a period of a one year at the initial stage; however, it can be extended for an extra year making it 2 years in succession after a review process. Once a business has obtained this sort of retail finance for two straight years, it can only utilize it again after a period of 3 years. One unique feature of a cash credit is that interest is charged only on the actual amount that business draws and not on the limit. But just as it is with loans, collateral and other forms security are a core requirement for a cash credit. Lastly, bank credits could come in the form of overdrafts. A bank overdraft allows businesses which hold an account in the lending bank to withdraw amounts that are beyond their balance. For a business to be eligible for an overdraft it must be creditworthy as seen from the perspective of the bank. Although there is lesser interest charged on a bank overdraft compared with what is charged on a cash credit or loan, it only provides a small amount of money, typically less than $2000.

Invoice Factoring

Invoice factoring is another way through which a small business can obtain the much needed retail finance, howbeit in an indirect form. Unlike most other sources of business funding, invoice factoring does not provide external cash to a business; rather it makes internal cash to be retained within the business for much longer. In simple terms, invoice factoring involves a business selling its invoices to a factoring company in exchange for a lump sum of cash.  The factoring company is a result of this transaction is empowered to collect the debts owed the business by its customers. However, the amount the factoring firm gives to the business is not exactly equal to the debts; rather the amount is around 90 percent or so of the debts. The percentage of the debts that the business gets in the way of a loan is often determined by how much easy it would be for the factoring company to retrieve the debts. It can be seen that not all businesses qualify for this sort of retail finance; in addition, getting an invoice factoring can be sometimes challenging.

Online Lending

Online lending is another good source of small business funding. These days there are lots and lots of online lenders who are eager to provide quick business loans that are often unsecured to firms which fall short of the usual bank criteria: collateral, good credit score, strong cash flow; experience in business as per the number of years of operation.  Online lenders typically charge very high-interest rates as compared with traditional sources of retail Finance. Although online business seems to be gaining popularity among small business owners especially because of the speed with which loans can be obtained, businesses have reasons to be worried. First, it is actually preferable to borrow money from firms which have a physical location as this assures all parties that the transaction is genuine; moreover, problems will more easily sort out. And since online business lending is still at the juvenile stage, lenders can abruptly go out of business, causing so much distress for borrowers.

Merchant Cash Advances

If there is any single source of retail finance that tends to compensate for the limitations in the other sources, then it is merchant cash advance.   A merchant cash advance is an unsecured form of financing which removes the problem of collateral and personal guarantees, enabling businesses that hitherto could not access bank loans to have access to funds. The issue of credit score which is also a major hindrance to small businesses is also eliminated. This is because merchant cash advance providers do not require a business to have a good credit score before it can be issued with an advance. Instead, what is often required is for the business to have minimum monthly revenue of $5000.  The problem of delay which is often associated with bank loans does not occur in merchant cash advance. Merchant loans can be processed within one week and the cash delivered to the business. Because retail finance is mostly used to tackle immediate problems in a business, a merchant cash advance is likely the best bank alternative available to a small business.

Read More: Self Quiz: What Funding is Right for my Small Business?


All in all, even though a merchant cash advance is more expensive than a commercial bank loan, for example, closer examination often reveals that it more than justifies its cost. With merchant cash advance having an approval rate of almost 90 percent, small business owners surely know where to look if in urgent need of business finance.

Published inPBC Blog

Loans for Small Business Owners Through Merchant Cash Advance

That business of all kinds will at one point or the other require financial assistance of some sort cannot be disputed. And the approach a business utilizes in securing the much-needed funding will depend on the nature of the business, the amount of funding required, and the purpose for which the loan or whatever credit facility that is required. Loans for small business owners come in different shades but are generally obtained for almost the same reasons.  For instance it is often the case that businesses have to purchase real estate in order to expand their operations and might not have the fund required to do that. Firms usually want to expand when they are turning a profit with a positive cash flow and are optimistic that expansion would bring even bigger profit. Real estate loans often come in the form of mortgage, involve the use of collateral and paid over a period of 20 to 30 years. However loans for small business owners are usually not mortgage loans for those for the purpose of equipment purchase, inventory purchase, increase of working capital, and in some cases to offset existing debt. For the case of equipment financing, small businesses have to choose between actually purchasing the equipment and leasing it. The reason why businesses might wish to take a loan to purchase equipment is sometimes that of certain benefits that come from doing so. For instance, the business can take a tax write off of about $25000 for the first and then proceed to depreciate the rest of the equipment over the rest of its economic life.  

On the other hand loans for the purpose of inventory are usually offered to a business which is seasonal in nature, particularly retail business. If for instance, a business makes the bulk of its sales during festive periods it would find it quite profitable purchasing its inventory prior to that time. So a business which is seasonal could obtain a loan from a commercial bank or any other source to buy inventory before that time and repay the financing from proceeds of its sale during the festive period. Such loans are short-term loans and as a result, could have considerably higher interest rates. Loans for small business owners which are however obtained for the purpose of increasing working capital are also short-term loans. Such loans are used to finance the day to day operations of the business until such a time when the earning assets of the business are sufficient to meet its working capital needs. Working capital loans can also be issued to a business in order to get off the ground and grow. But because working capital loans are considered to be much riskier, interest rates might be higher than those of, say, mortgage.

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Top Sources of Loans for small business owners

Online business loans

One of the most popular sources of loans for small business owners is through online lenders.  Over the last couple of decades, online business loans have become increasingly popular, corresponding with the general decline in bank lending to small businesses. This is something to be really considered since, according to a Harvard study, as far back as 1995 loans to small businesses made about 50 percent of entire bank loans; however, the figure had dropped to a little above 30 percent in 2012. Online lenders, which are rising to fill the gap this has created, make use of complex algorithms and technology to analyze credit score and cash flow in order to determine the creditworthiness of the business. As a source of loans for small business owners, online lenders see the need to provide quick access to cash that can be obtained from traditional lenders. Online lenders are not exactly for all kinds of businesses. For instance, startups are not eligible for online loans, while a business which has been in operation for more than one year, can always explore the option of online lending if it does not qualify for a traditional bank loan

Invoice Factoring

Loans for small business owners can also be obtained through invoice factoring. Invoice factoring is a loan transaction in which a business borrows money against its unpaid customer invoices. It is a way to get quick cash while waiting for owing customers to pay up. Invoice factoring bears so much similarity with a variant in which what is offered as a form of guarantee for the loan is not unpaid invoice; rather the business offers the debt is being owed. In this other scenario, the factoring company is empowered to collect the loan and give back about 90 percent of the amount it recovers for the business as the case might be. Invoice factoring, however, is suited for businesses that sell goods and services to other businesses since that is the only way there can be an invoice in the first place. Factoring also costs than term loans and even business lines of credit. In a nutshell, businesses which have been in operation for at least 3 months with bad credit scores, but having strong credit customers can qualify for as much as 2.5 million dollars’ worth of loans for small business owners, having an annual percentage rate of between 15 to 75 %.

Term Loans

It has already been stated that term loans from commercial banks have prior to our present time being the leading source of loans for small business owners. The main reason why bank loans have been attractive to small business is because of the small interests that are charged, of course, that is in comparison to what obtains from other sources. Loans from commercial banks are also often extended over longer periods. Moreover, banks are the ones have the financial strength to offer much more as most loans from nontraditional sources such as merchant cash advance have limits way below those of commercial banks. In spite of the seeming advantages of commercial bank loans, it is losing its place as the number one choice of those who seek loans for small business owners. In fact, one study found that more than 40 percent of small business owners did not even bother contacting banks for their financial needs. And the reason has to with the high rate if rejection faced by loan applications made by small business owners to commercial banks. Much of the reason for the rejection also has to do with the fact these businesses rarely ever meets the full requirements for obtaining commercial bank loans. Chief among the hindrance to small businesses is the issue of collateral which small businesses more often than not are unable to provide. There is also the requirement of good credit score and strong cash flow before loans can be granted to a business. All these difficulties have made small businesses over time turn to nontraditional sources for business funding.

Read More:Merchant Cash Advance and the Quest for Alternative Business Finance

Merchant Cash Advance

Merchant cash advance is widely regarded as one of the leading sources of loans for small business owners in the world of non-traditional lenders. A merchant cash advance differs significantly from a loan in a number of ways. First, it does not possess the major characteristic of commercial bank loans: fixed terms. In a merchant cash advance transaction there are no fixed terms in that there is no agreed time frame for the repayment of the loan. There is no virtually no such thing as early and late payments, neither are there are penalties attached to default in payment schedule as obtains with commercial bank loans. The merchant cash industry is also a largely unregulated one. This means that there is government oversight on the operations of merchant cash advance providers. In short merchant cash advance is regarded as a business to business transaction and as such laws that apply to business to customer relations do not apply. This is not to say tar everything goes in an MCA transaction since such laws such as the fair credit reporting act and the uniform commercial code applies to obtaining loans for small business owners through merchant cash advance providers. To be clear, in a merchant cash advance transaction a business agrees to give the merchant cash advance provider a portion of its daily credit card sales in exchange for a lump sum of cash which can be obtained almost immediately. The advance is multiplied by a given factor to arrive at the total amount the business pays back. A fixed portion of the daily credit sales of the business is then committed to paying the advance till the whole amount has been repaid and then the merchant cash advance provider loses its right over the receivables of the business. There are obvious benefits to obtaining loans for small business owners through merchant cash advance. Chief among these benefits it’s the enormous amount of time it saves the business. While a loan from other sources could take weeks to process, a merchant cash advance can often be processed in a few days once the business meets the individual requirement of the provider. The other major benefit is that loans so to speak from MCA are unsecured. The business stands to lose nothing if it is unable to redeem the loan. And most significantly, MCA providers do not require a good credit score before an advance is issued; instead, they simply require for the businesses to have minimum monthly revenue of about $10,000.


Unlike loans from other sources, the approval rate of merchant cash advance is in the neighborhood of 90 percent. This combined with the minimal documentation and the speed involved makes it ideal for small businesses. Resorting to MCA providers to obtain loans for small business owners have almost always found it rewarding.


Published inPBC Blog

Quick Loans from a Small Business Finance Company

Of the several challenges facing small businesses the issue of cash flow stands among the greatest. In order for a small business to survive, it must maintain a realistic working capital which helps it to balance the regular trading cycle. When a hitherto profitable business is unable to meet its obligations as a result of a reduction of working capital, it might fold up. Apart from obtaining working capital, a business might require funding in order to pursue other business objectives such as buying of new equipment, purchasing raw materials, and even meeting up with payroll obligations. Up until now, commercial banks have been the greatest source of business finance for small businesses; but nowadays alternative sources of funding have become the in thing for small business owners for reasons that shall become clear. The idea of getting finance from a small business finance company is all about seeking business loans from lending firms that have a special focus on small businesses. These firms all seek to make business funds easily accessible to businesses which have been denied access to loans from traditional sources of financing.

Reasons why small businesses are unable to access bank loans

There are quite a number of reasons why small business firms are unable to access loans from commercial banks. The most significant of these has to with governmental regulations which prohibit banks from lending to firms which are still at the budding stages. The logic behind is that such ventures are way too risky and banks would do well not to gamble with the finance which actually belongs to a citizen who is the depositor. Because of this reason, banks, unlike a small business finance company, do not lend money to startup companies.They are also very skeptical businesses in general, preferring to offer loans large corporations, which are almost certain to pay back. The recent economic recession experienced in the country did not also help matters. During the economic recession small businesses were the worst hit, and even though the country has gradually pulled out of the recession, banks have not regained their confidence in small businesses. While the total amount of bank lending to small businesses decreased by 20 %, there was a near 10 % increase in bank lending to small businesses. In short, it has come to the point where as much as 50 % of loan applications made by small firms to commercial banks end up in rejection. One survey even revealed that as many as 40 % of small business owners did not bother to approach banks for business funding; instead, they opted for a small business finance company, especially alternative lenders.

Read More:Merchant Cash Advance and the Quest for Alternative Business Finance

Poor credit or no credit history

Furthermore, bad or even no credit has also been identified among the reasons why small businesses get turned down for loans. A credit score is actually a measure of the creditworthiness of a business. The credit score tells how a prospective borrower behaved in previous loans or credit. And by behavior, we mean how committed the borrower is to meeting payment deadlines. In order to obtain a business loan firms are often required to provide both personal and business credit scores. Of course, each individual and business has different credit scores depending on the credit bureau that is reporting to the small business finance company. Although there are three main credit bureaus likely providing different scores it is not relevant in this place to state which lenders look at which credit score. What is relevant though is that there are certain factors which can make the credit score of a business low, one a business has to be aware of. Some of these factors include bankruptcy, late and missed payments, as well as issues with credit cards or even vendors. In some cases, a business is quite new and as such has no sufficient credit history to enable lenders to make informed decisions. What is also relevant is that a small business finance company, especially those in the alternative finance industry would not pay much attention to the issue of credit score, making them the top choice for businesses that have very low scores which could not be used to obtain bank loans.

No collateral or personal guarantee

As every small business owner who has tried in vain to obtain funding from a commercial bank can attest to, the problems of collateral are one that businesses of whatever nature often find insurmountable. And banks in a bid to guarantee the loans issued to a business will always insist on the business providing collateral. Collaterals are physical property which guarantees a loan if it is not repaid, meaning that a bank, for example, could possess the said property if the business is unable to repay the loan at the specified time. But small businesses usually do not have high-value pieces of equipment or real estate which could be used as collateral in any loan agreement. Even when a personal guarantee is required, small business owners are often reluctant to offer such things as homes, personal cars, further complicating issues and necessitating their visiting a small business finance company such as a merchant cash advance provider or even an online lender as the case may be. The situation, however, for small businesses, is not one that cannot be remedied. This is because alternative lenders such as merchant cash advance providers are known to provide unsecured loans in which the borrower does not bear any risk, and in which the lender stands to lose the entirety of his investment without any means of recourse if the business falls into difficult circumstances and fail.

The problem of cash flow and loan amount

The last major issue that would make a business to turn away from obtaining business funding from a commercial bank, but to rather opt for a small business finance company such as one that offers merchant cash advance has to do with cash flow. This is because banks would naturally want to determine whether or not a business has enough revenue to enable it catering for monthly payments. But the vast majority of small businesses struggle to have some cash in the bank aster they must have met basic obligations such as buying raw materials, paying workers, and buying inventory. The major reason why this happens is that a small business often has to pay third-party suppliers for goods before they get to receive their own pay for the goods. It is the time lag between when payment is made for inventory and when revenue is generated from them that causes major cash flow problems for small businesses.

One way a business is to determine if it can meet up with monthly loan payments is by calculating its debt-income ratio. Let us assume that a business has a cash flow of $6000 and is willing to make loan payments of a maximum of $2000 each month. In that case, the debt-income ratio is 3. Most lenders have been known to require a ratio of not less than 1.5 before considering lending to a business. In as much of as the idea of a bank making sure loan payments would be somewhat convenient for a business is somewhat laudable, a small business finance company, however, would not bother with such things as debt income ratio. For example, merchant cash advance providers who are leading providers of quick business loans to small businesses are generally willing to offer a business as much as 50 % of its monthly revenue as a loan, provided it meets the minimum revenue requirement which for most merchant cash lenders is $10,000. Meanwhile, the amount of loan a business is seeking could also determine if it should approach a bank or not. After all, most small businesses seek loans of less than $15,000, which banks are not willing to underwrite. The reason they do not is simply that it would cost the same thing to process a 2 million dollar loan than it would a 50 thousand dollar loan. But banks stand to make more profit from the former. That is one reason a business could opt for a small business finance company such as those that offer merchant cash advance since they are ever ready to provide loans as small as $5000 to a business that is qualified.

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Final note on alternative lending

Throughout this discussion, we have pointed to the fact that a small business finance company particularly that which has to do with merchant cash advance. The reason emphasis has been laid merchant cash advance is because it offers much more for small businesses in dire need of cash. Starting from the ease with which a cash advance can be obtained to the speed with which it can receive— often in a matter of a few business days—merchant cash advance has proved to be an invaluable source of funding for small businesses. Need we mention that there is no collateral requirement, or that it is not necessary for a firm to have a good credit score to benefit? In short, from whatever angle one chooses to see it from, merchant cash advance is well worth its cost. More and smaller business owners are beginning to embrace the opportunities provided by a small business finance company, but with a special tilt towards merchant cash advance, which is not at all surprising.

Published inPBC Blog

Merchant Cash Advance and the Quest for Alternative Business Finance

Everyone in business knows how challenging it is for a business to generate and maintain working capital. Beyond that, businesses—especially the small ones—are always looking for opportunities to grow and expand. But insofar as the growth and expansion of the small business are dependent on the number of funds at its disposal, there is always a tendency for growth to be halted. When it comes to the issue of getting adequate business financing, firms are gradually looking away from traditional lending sources and shifting their focus to alternative business finance. Before we take a look on what alternative lenders offer and what the best alternative lending option is, we shall look at the issue of working capital and how it impacts the success, or failure of a business.

Speaking from a technical perspective, working capital is a term that denotes the amount by which the current assets of a business exceeds its current liabilities. Of course, this way of viewing working capital is bound to appear somewhat confusing to the average person who is accustomed to seeing working capital strictly in terms of cash that is available to a business to maintain operations. However, an understanding of the concept of working cycle is necessary for explaining working capital. The working cycle is used to evaluate the accounts receivables, inventory and account payables. The account receivables are measured by the number of days that is needed to collect an account, all things being equal, while the inventory is evaluated based on the number of days it will take to turn over the sale of a particular product. Since most small businesses cannot finance their working cycle with just the accounts payable which are evaluated by the number of days it takes to get a supplier invoice, small business often resorts to business loans and sometimes alternative business finance. But apart for the sake of working capital, a business could also seek financial instance to purchase a new piece of equipment, buy additional inventory and even to offset pre existing debt.

Why are small businesses turning to alternative business finance?

The first point of call prior to our present time for small businesses in need of cash used to be commercial banks. But for some time—especially since the economic depression of 2008—banks have generally cut down lending to small businesses by as much as 20 percent. The issue of depression is one way to look at the problem. For indeed there had never been a time when banks and other traditional lenders granted loans easily to small businesses—something which alternative business finance providers are known for. Part of the reason why small businesses find it difficult to secure loans from banks is that, in most cases, they are unable to meet the hitherto stringent requirements required by the banks.
Commercial banks generally look at the credit score of a business before deciding on whether it is to be granted credit or not. Small businesses often have poor credit scores and this automatically makes the affected business ineligible for bank loans. In some other instances even when the business has met all other criteria for the loan—good cash flow, excellent business plan, etc. - the final obstacle would lie in providing the needed collateral. Not much can be said on this as everyone knows that small businesses are more often than not unable to produce the collateral. Alternative business finance has thus become a viable option for small business and we shall take a brief look at some of these sources before proceeding to discuss merchant cash advance which happens to be a most popular choice among small business owners.


Read More: Loans for Small Business Owners Through Merchant Cash Advance

Trade Credit and Equity Financing

One of the top sources of alternative business finance for small businesses is equity financing. Equity financing is suited for businesses that have been in operation for only a few years. It is the best option for a business that has not been turning profit in its first few years of operation. Being that equity funds are meant for short-term financing, they can be obtained from the sale of personal assets, or from friends or family. Equity funding cannot be expected to meet the short-term financing needs of a business at all times since obtaining funds from friends or family cannot be guaranteed. After all, small businesses might often require finding when emergency situations such as equipment failure come up. In such situations getting an investor, for instance, to provide financing might not be fruitful and the business is left stranded. One other source of alternative business finance is trade credit. Obtaining business funding from trade creditors might be considered a good option only when a business has had a smooth relationship with its trade creditor in the past. What trade creditors do is to help small businesses fulfill large orders. This kind of funding is not versatile as it cannot be used to purchase a piece of equipment nor can be used to carry out certain business activities.

Business Line of Credit and Invoice Factoring

Invoice factoring is one other source from which small businesses can obtain alternative business finance. The way it works is quite uncomplicated: when a business has an order, a firm called a factoring firm purchases the account receivables of the business and afterward proceed to manage the order. This is the sort of financing that is often adopted by startups as they are often not eligible to receive loans and other forms of assistance from traditional sources. For instance, most banks would usually require a business to have been in operation for at least two years before it can be eligible to receive loans. However, there are some merchant cash advance firms that offer alternative business finance to firms which have been in operation for at least 3 months. A business line of credit is another option that is quite popular among the small business folks. A Business line of credit is open to small businesses that are well capitalized as well as those that are able to provide the required collateral. And these are the reasons that make a line of credit not exactly suitable for business that are struggling and which cannot provide collateral.


Merchant cash advance as the best option for small businesses in need of quick cash One major source of alternative business finance, which is not plagued with the issues of collateral security and good credit scores as in the previous sources we have discussed is a merchant cash advance. A merchant cash advance is an unsecured financial transaction between a business and merchant cash advance provider that is not governed by laws that apply to conventional loan transactions. In a merchant cash advance transaction, the business offers to sell its future receivables at a discounted price to the merchant provider in exchange for a lump sum of cash which it is given almost immediately. Because of this alternative business finance agreement is structured, it is not considered to be a loan. First, as a defining property, a merchant cash advance does not attract interest payments, at least in the traditional sense of the word. And it is unsecured. This means that a merchant which obtains a cash advance provides no personal guarantee that the loan, so to speak, will be repaid at some specific time. So if the business should fall on hard times, or for some other reasons it is unable to pay back the advance, the merchant cash advance provider suffers a complete loss.


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What are the General Requirements for Obtaining a Merchant Cash Advance and What does it entail?

Before a business is deemed eligible for a merchant cash advance, it must meet certain requirements which are, however, not as difficult as those of commercial banks. The first thing that merchant cash advance providers usually consider is whether or not the business in question generates enough credit sales that would enable it to easily repay the cash advance. This is very important since the business provides no guarantee in the first place. Merchant cash providers, as a minimum criterion, often require that a business should be generating nothing less than $5000 a month. To receive alternative business finance from merchant vendors, the business must also accept credit card payments such as Visa and MasterCard. In addition, MCA providers would require that the business has a physical location and as such online businesses are generally not eligible for an advance. As for the amount a merchant can borrow, merchant cash providers allow businesses to borrow from 50% to 250% of their monthly receivables. The merchant is then made to pay back the advance which must have been multiplied by a certain factor, by remitting a portion or percentage of its daily credit sales to the merchant vendor, until the advance has been fully repaid.


When it comes to alternative business finance, merchant cash advance stands out because of the speed with which it can be obtained—often less than a week. In addition, quite minimal documentation is required in order for an application for a cash advance to be processed. Moreover, there is no risk of personal loss to the business. But in spite of all this, some still object to merchant cash advance because of its relatively higher cost. While this claim cannot be totally dismissed, small business owners are better aware of how it is that the benefits that come from MCA outweigh the said cost. In all, the merchant cash advance industry is expanding and more and more businesses are taking advance of it.

Published inPBC Blog

Finding the Best Lenders for Small Business Loans

Getting the best lenders for small business loans is one of the numerous challenges facing small business owners the world over. It is well known that the issue of adequate financing remains one of the leading causes of business failure in the country—especially the small ones. So it is not surprising the amount of effort that business owners have to put into securing commercial loans or other forms of business credit since the demand is exceedingly high and the lenders mostly the traditional ones remain skeptical of small businesses. For instance, small businesses have often had to spend a great deal of time in trying to boost their credit scores as those are a major requirement for obtaining small loans. Lenders tend to perceive businesses with low credit as riskier (after all loans are in general risky), so boosting the credit score of a business is one way of saving time and avoiding potential frustration in the long run. In addition, getting the best lenders for small business loans should actually being with a solid business plan on the part of the business as no lender however small would be willing to invest in a business that has no clear vision. The business plan is expected to show the lender whoever it might be what the money is to be spent one, what is projected for the future of the business and how the financing to be received fits into that plan.

Things to look out for in choosing the best lenders for small business loans

Loans required by small businesses are usually relatively small, however, as should be expected lenders have different capabilities when it comes to how much they can loan to small businesses. It is therefore expedient for small business owners to opt for lenders that are likely to respond positively to the requested amounts. For instance, online lenders do not typically offer seven digit loans as opposed to commercial banks which can easily dole out such amounts. However, nontraditional best lenders for small business loans can offer six-digit loans which are actually what the vast majority of small businesses would require. It is important for a business to deal with lenders who make their eligibility requirements quite clear and not leave room for ambiguity since it would be highly frustrating for a business to begin a loan application only to find out that there are certain requirements that it does not meet. That said the issue of annual percentage rate should also play a major role in helping small businesses decide on what credit options to pursue. In this regard, it is usually commercial banks that offer loans with lowest APRs; while cash flow loans with quick turnarounds have higher rates. The best lenders for small loans should also be lenders that offer terms that are quite very flexible in addition to having a short processing period since most small business loan needs arise from emergency situations which need to be salvaged very quickly.


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Looking at the option of commercial bank loans

Commercial banks no doubt rank among the best lenders for small business loans for quite a number of reasons. The most significant thing about commercial bank loans and indeed loans from a traditional financial institution is that the interest rate is quite low in comparison with those of loans from other sources. Moreover, commercial bank loans can be repaid over long periods of time with some loans having periods of more than 20 years. This is one thing that nontraditional lenders cannot offer for reasons which will soon become apparent. And, of course, it is much easier for small businesses to repay loans from commercial banks since the monthly payments which are in any case small might not adversely affect cash flow. In addition, there are some incentives which come with commercial bank loans. For while there are strict penalties for late payments, there are benefits attached to early payments in the form of smaller interest rates. And most of the best lenders for small businesses that happen to be commercial banks often partner with relevant governmental agencies. For instance, the small business administration sometimes partners with commercial banks to provide loans which are backed—in which the SBA pledges to repay the loan or a portion of it if when the business is unable to.

Why Bank Loans are Not Exactly Suited for Small Businesses in Dire Need

In spite of the seemingly endless benefits that come from commercial bank loans, there are discouraging aspects. There is nothing actually more disconcerting about loans than the fact that it is extremely difficult for small business to obtain. While it is true that as many as 31 percents of small business as research suggests are reliant on commercial bank loans, it is even truer that the number of businesses turning over to other non-bank sources is on the increase—rapid. In short, it has been stated that much of the loan applications from small business to banks—around 50 percent—get rejected, that is after several weeks or months of waiting for the request to be evaluated. The reason why loans from one of the best lenders for small business loans might seem out of reach of small businesses is not farfetched from the inability of the small business to meet up with laid down requirements. Of all requirements for obtaining commercial bank loans, none stands in the way of small businesses as much as the issue of collateral. Banks require collaterals to act as a form of security against the loans and in some cases, they even obtain personal guarantees from the owners of the business.


Not surprisingly small businesses are almost not always able to provide such collateral requirements which automatically make them not eligible for loans. The issue of credit score also poses a major challenge. Banks typically favor businesses with good credit scores as this serves to underscore their creditworthiness, while being wary of those with poor scores—which are, sadly, in the majority. Above all, loans from banks cannot be relied on in emergency situations which small businesses are often found in. It takes a long time to process bank loans in general. All these factors readily cast doubt on whether commercial banks can actually be regarded as one of the best lenders for small business loans. However, it is not all gloom for small business owners who are gradually embracing alternative lending sources such as merchant cash advance. It is this particular source of alternative business finance that shall be examined next. In evaluating merchant cash advance, it is our aim to compare and contrast it with commercial bank loans, sitting areas in which MCA funding beats loans from traditional financial intuitions.


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Brief Description of Merchant Cash Advance

In sharp contrast to what might be the general belief a merchant cash advance is not technically a loan and does function as one either. A merchant cash advance is a transaction in which a business agrees to sell its future credit receivables to a merchant cash advance provider in exchange for a lump sum of cash. Simply, put the business offers the merchant cash advance provider a fixed portion of its daily credit card sales until the cash advance is paid back. Indeed, merchant cash advance is considered as one of the best lenders for small business loans especially among alternative finance providers for reasons which shall be explained shortly. The process of obtaining a merchant cash advance starts when the business owner signs the merchant cash advance agreement. In this agreement, such things as the factor rate, the total payback amount, and the withholding percentage or amount are all stipulated. The factor rate is some figure around 1.2 to 1.5 which is used to multiply the advance to arrive at the total amount the merchant is to repay. While the withholding percentage is the proportion of the daily credit sales which is to be remitted to the lender in order to gradually offset the advance. The process of remitting a portion of sales on daily basis continues until the loan is repaid.

How does Merchant Cash Advance beat commercial bank loans

Merchant cash advance vendors clearly are among the best lenders for small business loans since it does not involve collateral which is the biggest obstacle to obtaining bank loans. The absence of collateral requirement not only means that businesses are more able to obtain financial assistance, but that they do so without risking anything in the process. It is the cash providers that stand to lose everything if the business fails. In addition, the chances of a merchant being accepted for a cash advance once the small requirements have been met are almost 100 percent as opposed to what obtains in commercial bank loans where the likelihood is less than 40 percent.


Furthermore, it takes quite a short period of time plus minimal documentation before an MCA loan can be processed and cash issued to the business. For instance, while it could take months for a bank loan to be processed, obtaining a merchant cash advance is often a matter that can be sorted in a few business days. Moreover, since interests are not charged on a merchant cash advance, the question of accumulating interests does not arise, and businesses tend to cope better with this arrangement. Above all, merchant cash advances are structured in a such a way that is repaid within a short period of time which is often less than 18 months, ensuring that businesses are not indebted for long periods of time. Finally, it must be said that more and more businesses are beginning to see why merchant cash advance providers are likely the best lenders for small business loans. And since that is the case, it would be worthwhile for any small business to give merchant cash advance a try.

Published inPBC Blog


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