Small business merchants know that it can be tough to find a loan. When banks turn them down and it seems like there is no place else to turn, some merchants jump on the first thing that comes by, without reading the fine print. This is a huge problem – and it can affect your business and your personal finances if you make the wrong choice.
Some online small business loans are not worth dealing with. Payday-type loans are always a no-go, even if they claim the interest rate are good. The companies can end up charging you 150% of what you originally borrowed, and the payback process is never-ending. Crowdfunding sites are popular, but they are also not a good idea for the most part. While some have found success using a crowdfunding site, most find themselves without the funds that they need – and losing more funds, thanks to the fees that the hosting websites charge. Some of these websites take as much as 30% of the amount raised, so you would be less that.
If these two popular online small business loan or cash funding methods are not ideal, what is? Many merchant account providers, like FAM, offer a small business loan program – that isn’t a loan. A merchant cash advance is what it is called, and while it may look like a loan, it is not. It is a “buy in” to your future credit card business. Your funds are sent to your merchant account (or business checking account if you do not have a merchant account), and every time you make a credit card sale, a small percentage is taken from that sale to go towards your repayment. This leaves no large checks to write monthly, and no scrambling to find funds when payments are due.
One of the toughest things a small business merchant faces is how to get a loan. Many turn to the internet, but be careful, as most of the websites are not optimal for your business. Your best bet is a merchant cash advance, so be sure to contact FAM or your merchant account provider when you are in need of funding.