Funding a small business nowadays through traditional means is increasingly becoming more difficult. A small business loan from a bank is harder to obtain though they are very efficient. If a small business however has had issues related to credit, banks can be more reluctant to provide a loan. There are some alternatives sources of funding though that could prove very useful to small businesses.
One alternative to a small business loan is a merchant cash advance loan. Merchant cash advances are simple as they automatically take a portion of each credit card sale the business makes to pay back the money borrowed from the issuer. While interest rates are typically higher than a bank loan, the risk of granting a loan with no collateral requires it.
Another possible source of a small business loan is an angel investor. Angel investors are people who give loans in exchange for timely repayment. Usually there is a percentage of the loan that must be paid as interest over time. Sometimes angel investors are more involved with the businesses that they loan money to offering advice or mentorship to improve the business’ overall functionality.
A hard money loan is another option for small business loan funding. This type of loan enables the business owner to use the assets of the company as collateral to secure a loan. The loan isn’t related to the credit rating of the business, nor the owner’s credit worthiness, the collateral is the determining factor.
Small businesses can also sell their accounts receivables as a means to obtain a loan. This gives the business immediate funds. As the business receives money from clients, the business gives the money directly to the lending agency. The interest rate on this type of loan is quite significant, especially compared to a traditional small business loan. It is however a guaranteed money source and there is lower risk involved.
To learn more about a merchant advance for your business call 1-888-785-6811