Business Loan Rates and Cash Advance No Credit Check Options
Not all business loans are created equal. If you are looking for ways to get small business financing, you probably have seen several options you could pursue. But how do you know which one best fits your needs, limits unexpected costs and carries the least amount of risk?
The wise business owner looks to limit the amount of risk involved in borrowing and looks for safeguards that protect the business if things do not go exactly as planned. Before you sign on the dotted line, you should know how much your loan will cost you over time, if there is any flexibility in your monthly payment, and if there are any benefits or risk factors that go along with your interest rate.
Qualifying for financing
If you own a small business, it can be harder for you to qualify for the traditional bank loan. According to Forbes.com, most business owners don’t meet the tough new criteria required by banks and their credit scores play a huge role in whether their application is approved. Many have been forced to seek alternative funding.
This is actually good news for business owners who might never have questioned whether a long-term loan is truly the best option for their business needs.
Things to consider
You should know that a lower interest rate associated with a long-term loan comes at a cost. Perhaps you will be paying more over time because of the long duration of the loan, or receiving a higher interest rate than you expected because your credit score is not pristine. Also, there are additional risks involved in committing to a fixed monthly payment for a long period of time.
In contrast, a short-term funding option that carries a slightly higher interest rate can allow the flexibility required by your business. It also will be paid back faster, which can save you money in the long-run and assure you minimal risk. A cash advance no credit check may come with a higher interest rates, but this option is a workable solution for many business owners. When considering business loan rates it’s important to think about the length of the loan.
Long-term, low rate: What is the risk?
If it seems too good to be true, take a closer look. Though a long-term business loan may be offered at a lower interest rate, you are paying interest for a much longer period of time. Add up what you pay in interest for the full term of the loan and it may negate any benefit in choosing the lower interest rate.
There are several added risks to borrowing long-term:
- Nobody has a crystal ball that shows them for certain if this investment of capital will produce reliable and continuous business growth years down the road. Committing to making loan payments for the long-term means that those increased sales you are counting on must be sustainable.
- Balloon payments can burst your success bubble. According to businessnewsdaily.com, business owners often take on bank loans that include a balloon payment at the end. If they don’t have the money to make that balloon payment, the borrower is forced to refinance the loan and spread out the balloon payment over a few more years. With interest, this usually results in higher costs than business owners expect.
- Fixed payments with fluctuating sales can equal financial crisis. Many business owners find themselves unable to make a payment because there are typically slower periods during their business year. Whether it is a seasonal decrease or simply a slower month of sales, your sales volume is not considered as a factor in making your payments.
- You may lose your collateral. A long-term loan may require some type of valuable property to be offered up as collateral to secure the loan. Borrowers may put up the business property or even their own home as collateral. If for any reason you can’t make your payments, you could lose everything.
- A long-term loan is really a long-term debt that risks personal assets. According to smallbusiness.chron.com, a guarantee of repayment is often required in order to obtain a long-term loan from a bank. This puts your personal assets (your home, car or anything of value that you own) at risk, including your personal credit rating, if you are unable to make the loan payments at any point throughout the term of the loan.
Less risk, greater overall success
There are a few options outside of the long-term loan that limit your risks and carry shorter repayment terms, which makes them the smarter choice even if they carry a slightly higher interest rate.
A perfect example is the Merchant Cash Advance, which offers an unsecured cash injection granted to you based upon your volume of sales and the overall health of your business. A Merchant Cash Advance is not a loan, but rather it is a funding solution that allows you access to tomorrow’s sales today, providing you the funding you need right now.
Repaying the advance is just about risk-free. Your payments are a set percentage of your business’s daily credit card processing receipts. This limits your risk significantly. Why? Because payments are not a large pre-set amount, unaffected by seasonal slumps or a slow month of sales.
Instead, your payment is based upon your actual sales volume each month. This allows for sales to ebb and flow and your payment adjusts accordingly. This advance may have a slightly higher interest rate than a long-term loan, but that factor is offset by the benefit of having payments that you can always afford.
Unlike the requirements of time and collateral that the bank seeks, this type of funding answers to immediate needs and is something you pay back over a shorter period of time.
The decision for your merchant cash advance is typically made within two business days and your credit score is not part of the approval process.
A lower interest rate does not always make up for the added risks involved in a long-term loan. Consider other options that limit risks and provide the funding you need with terms that support your business success. Look to Credibly for loan alternatives: our merchant cash advance can help you grow a successful business. Apply Now!