All businesses struggle from time to time, and while some can seem to snap out of it quickly, others are scrambling for funds. Others are simply small businesses with little credit and a big issue when it comes to finding a legitimate funding source. There are many ways to obtain extra funding, commonly known as “alternative lending”, and while not all are quick methods, they can help you get your business out of a hole. Some of these are true “loan” types, and have to be paid back, while others are “grant” types and do not. The choice is up to you, as all methods do not work for every business. Below are some of the best – and time tested – methods of alternative lending.
A merchant cash advance is one of the best options under the alternative lending banner. While many merchant account providers offer these services, not all are created equal. For example, some require you to keep your chargebacks at an unreasonably low level of 2 per month. For those in “high risk” businesses, this is simply not possible. Others, such as the programs offered by FAM, require very little, aside from a merchant account to withdrawal funds. This is how payments are made, unlike a bank loan where lump sums checks are written monthly. With every credit card sale you make, a small percentage is taken from your merchant account.
An ACH loan is similar to a merchant cash advance, but it is for those who do not have a merchant account. While the criteria is stricter (better FICO score, less chargebacks, at least $10,000 brought in monthly) the process is just as simple. This is great for those businesses that do not want a merchant account – or the hassle of a bank loan – but need extra funding. Payments are taken from the business checking account, so no checks have to be written.
The option of a loan versus other lending options can be tough to figure out. There are many choices around, but not all are worth spending your time looking into. The two that are tried and tested – and have a positive feedback from merchants big and small – are offered by your merchant account processor.