Online Cash Loans And Other Business Funding Options

2015-04-03

Jeffrey Bumbales

Obtaining small business funding is a vital component in making your business dreams a reality. But what type of funding is right for you and your business objectives?

Understanding the basics of how to raise capital and all the options available to you will help you identify the best business capital solution for your business.

Banks Are Not Your Only Financing Option

Heading into your bank for a business loan has gotten a lot more challenging since the economic downturn of 2008.

According to Mitchell York, an entrepreneur expert at aboutmoney.com, small business owners and entrepreneurs looking to launch a start-up have to be more resourceful than ever before when it comes to raising that much-needed capital.

Banks may be the primary source of financing for small businesses, but meeting all of today’s stringent credit criteria and proving you are creditworthy has become more and more challenging.

Thankfully there are many other sources for small business funding out there including small business loans, SBA loans, funding from credit cards, angel investors and merchant cash advances.

Match Your Funding to Your Unique Needs

As you consider the ways you can raise capital for your small business, whether it is a restaurant, a construction business, retail or any other venture found on Main Street, it is important to identify exactly what the capital will allow you to do.

How will it increase your bottom line and positively affect your business? Once you have clarified the exact purpose, then you look at your options.

Bank Loans

Taking on debt may be necessary for your business to grow. Bank loans are always an avenue you can pursue, but they come with some long-term obligations and an application process that is not exactly streamlined or stress-free.

You will have to do your due diligence by having all of your documentation in order. Traditional banks usually require detailed business plans during the loan application process, some form of collateral, and you should be prepared that your credit score will be part of a bank lender’s decision.

It typically can take at least 30 days for a decision on your loan, so if time is of the essence, this is not a good fit for your needs.

Small Business Administration Loan

Also known as the SBA, the Small Business Administration provides several financial assistance programs for small businesses.

This government-run organization does not provide the actual loan, but rather sets up guidelines for a loan, which is made by participating lenders or community development organizations.

The SBA offers two types of loans that can help you obtain business capital. The 7(a) guaranteed small business loan is the most common loan to start or expand a business and the 504 fixed-asset small business finance program provides growing businesses with long-term loans, fixed-rate financing for things such as buildings or land.

If your business venture does not have a proven track record, these programs may not work for your needs. Traditional SBA loans typically look at your two-year business history, can take 60 to 90 days for approval and are typically for $150,000 or more.

Home Equity Loan

If you own your own home and have a substantial amount of equity in it, you may be able to tap into some of those funds. The flexibility is tremendous, but so is the risk.

If the business fails or you cannot maintain the terms and conditions of the home equity loan or line of credit, you risk losing your home to foreclosure.

Credit Cards

With zero percent interest offers and no requirement for collateral, using a credit card to fund your business may seem like you could go from zero to hero with no worries. But besides those obvious pros are a list of cons to consider.

With a credit card funding your business, you may not have appropriate separation from your personal and business finances. This can negatively impact your credit score if your business fails or you can’t keep up with the payments.

It is also easy to overextend yourself and end up with a larger payment than you anticipated. Credit cards also have lower limits than a typical small business loan and may not provide adequate funding.

Angel Investors

This alternative form of investing was behind the start-up of Costco and Google. Finding an angel investor is typical for a company that may be young, but is demonstrating substantial growth possibilities.

Be prepared that you will be surrendering a portion of your future financial success with this avenue of funding. Investors typically look to get a 20 to 25 percent return on their investment.

Merchant Cash Advances

According to a recent article in Business News Daily, alternative funding like a Merchant Cash Advance is quickly becoming the popular choice for the savvy small business owner today.

Since bank funding typically requires a long wait, extensive credit evaluation or is unavailable for the smaller loan amounts, many small business owners are turning to alternative sources such as Merchant Cash Advances.

For many small business owners, the speed, availability, and flexibility of this type of funding provide the financial infusion that allows their business quick growth and answers to immediate needs. The decision for a merchant cash advance approval is typically made within two business days and your credit score is not part of the approval process.

These are unsecured business online cash loans based on a merchant’s volume of sales and the health of the business as a whole. Essentially, they grant you the advancement and the money is paid back based upon a small, set percentage of the business’s daily credit card processing receipts.

So there are no fixed payments, rather it is based on the sales volume of your business as it ebbs and flows.

Explore All of Your Available Financing Options

As you explore and consider various funding options that can serve you in growing your business, consider which best suits the needs and time-frame you and your business require.

In many cases, business online cash loans are the best solutions. Pre-qualify now or call a business consultant at (888) 991-3954to get started.