In a nutshell, risk is what stands between smaller businesses from borrowing money to increase staff, add new products, or buy a necessary piece of equipment. So, how does a smaller or less-established merchant, get the money they need.
First, apply to alternative lenders instead of banks. They are not willing to accept the risk that comes with these types of businesses because they do not have collateral, enough good credit, and are too likely to go bankrupt.
Due to these challenges, smaller businesses should pursue alternative lenders that are willing to help you fund the growth of your company. Whether it’s through merchant cash advances or retirement accounts, mom and pop business funding is possible.
Business Funding Options for Mom and Pop Businesses
When traditional bank loans won’t work, consider funding your business with:
- Bartering: Bartering or swapping products or services for funds to pay for something additional inventory, new equipment, or new product development, is an option that works perfectly for a mom and pop business. Not only do you get the money you need, but it is a good opportunity to get rid of unnecessary inventory or try out a new product or service. Just remember your limits. This is not the right option if you need to hire employees or pay a rent increase.
- Apply for a Government Grant: Getting a government grant requires you to research the opportunities at local, state, and federal levels. This is a no-frills option, meaning that you do not have to pay anything back if you are eligible. However, do not forget that because of this, it is a very competitive funding source. Additionally, remember that government-based funding often comes with many stipulations. For instance, there may be reporting requirements, audits, and others terms that your business must adhere to receive the funding.
- Apply for a Merchant Cash Advance: Business funding, such as a merchant cash advance, is a good option for mom and pop businesses. Since advances are based on future credit sales, you pay less when sales are in a slump instead of a static monthly payment. Also, a merchant cash advance gives you a great deal of flexibility in terms of how you can use the dollars. Alternative lenders offer unrestricted use of funds while traditional loans have many restrictions. If you have a high volume of monthly credit card transactions and you can provide proof of credit card processing for a few months, a merchant cash advance can be just the solution you need. Other pluses are that you need no collateral, and you do not need to have a good credit score to get qualified.
The Last Word on Business Funding
There is no universal answer when it comes to choosing mom and pop business funding. Every business must make a decision on its own, individual needs and preferences, when they want to borrow, how much, and where to get it.
Though the choice is a personal one, you have to appreciate having so many to consider. Knowing what’s available will allow you to make the most informed decision that works for you in the now and in the future.
Don’t allow banking regulations and strict credit requirements prevent you from getting the business funding you want and need. If your mom and pop business cannot get a traditional business loan, apply for business funding via an alternative lender, such as First Merchant Account (FAM). It specializes in providing merchants with financing options that work for every business. Apply online today to experience a simple, streamlined application process.Get Started Now