Some industries are considered to be riskier than others. For these businesses, funding options becoming seriously limited. In an effort to secure the capital they require to operate smoothly and cover expenses, many turn to high risk business loans.
The problem with trying to secure a small business loan with a bank is that traditional lenders are unwilling to work with risky industries or those struggling with a bad credit history. Even if they do offer specialized business loans, you can expect to experience long wait times for approval, hefty collateral requirements and extensive documentation requests. As a result, startups and small businesses seek the services and support of alternative lenders.
Alternative lenders specialize in offering funding programs that are tailored to meet the needs and challenges of each business type it works with. For these lenders, high-risk industries and bad credit are not a problem – it’s their specialty. Because approval is based on your business’ performance (rather than time in business or financials), the application process is simple and straightforward.
So, what alternatives to a high-risk business loan do these alternative lenders offer? Among the alternatives to the small business loan is the merchant cash advance. First American Merchant, for example, offers business owners the opportunity to secure the cash they need in as little as 72 hours – if not sooner. The alternative lender purchases your future credit card sales at a discount, and then advances you funds. The amount of sales being purchased and for what discounted cost is agreed upon by both parties.
For the high-risk business, there are many benefits in using the merchant cash advance. In addition to receiving your funds quickly, there are no fixed monthly payments. Payments are automatically withheld from credit card transactions. The collections process is not only easy, it is also flexible. During slow periods, your business will pay back less. When it experiences a jump in sales, it pays back more. This ensures your business continues to have sufficient cash for day-to-day operations and expenses.
Merchant cash advances have quickly become one of the most popular forms of financing for startups and small business owners. If you’re seeking an alternative to the high-risk business loan, consider what a cash advance could do for your business. Regardless of risks or bad credit, your business can secure the cash it needs to grow and to seize opportunities.