Posts Tagged ‘Businesses’
Businesses Turn to Merchant Cash Advances as Business Loan Alternatives
Even as the economy begins to turn around, banks remain hesitant to extend credit to small businesses. After a lengthy application process and rigorous audit of the business’s financial documents, many business owners are coming up short in finding the capital they need to grow their business. Without stellar credit and healthy financials, your chances of getting access to capital from traditional funding sources are slim.
Many retail business and restaurant owners have turned to the business cash advance as an alternative. The cost of the funds is typically higher than what banks would charge, but it comes with certain benefits:
- The application process is very simple. There is minimal paperwork required. Pre-approvals can be provided within 24 hours, and funding often takes place within 5 – 7 business days.
- Approval rates for qualified applicants are as high as 90%.
- Good personal and business credit isn’t required.
- There is no need to pledge any assets or collateral (business or personal) in order to secure funding.
- The methods by which advances are paid back make repayment very flexible. A percentage of the business’s future credit card sales, typically between 10% and 20%) are withheld by the merchants credit card processor and applied towards the balance of the advance. A slow month in credit card sales results in a lower amount paid back towards the advance. This makes it easier to cope if business slows down a bit.
- Businesses typically qualify to receive an additional advance before the first advance is entirely paid off. This varies case by case, but once the balance is down to about 50%, many merchants qualify for additional funds.
There are many merchant cash advance providers out there. Each has their own strengths and weaknesses. Companies like Sure Payment Solutions are able to find the right match for each business based on each owner’s particular situation and needs. Visit www.surepaymentsolutions.com. to learn more.
Our management team has a combined 20 years of experience in the merchant funding and credit card processing space.
Businesses Best Suited for Business Line of Credit
Not every business requires the usage of a <a rel=”nofollow” onclick=”javascript:pageTracker._trackPageview(‘/outgoing/article_exit_link’);” href=”http://www.businesloc.com”> business line of credit</a>. Some businesses produce more than enough cash flow to sustain the operations on an ongoing basis without needing to take on the liabilities associated with a credit facility. These businesses are most suited to take out a business LOC during times of expansion rather than financing the day to day operations of the business. For other businesses (such as large scale distribution firms, manufacturing companies, and other capital intensive businesses), a business loc may be the only way to conduct business. Below is an overview of the types of businesses that are most suited to use a credit facility:
Most Suited
Manufacturing Companies
Retail Businesses that carry extensive inventory
Wholesale Distributors with substantial inventory
Service firms that carry substantial amounts of accounts receivables
Medical Product Distributors
Pharmacies and Pharmaceutical Companies
Partially Suited
Firms that are undergoing a significant expansion over a set period of time
Companies that have irregular cash flows but regularly fixed cost expenses
Professional Service firms that receive government payments
Law Firms
Medical Practices and Allied Health Professional Practices
Ultimately, it is up to you to determine whether or not your business truly does need a business LOC. As always, you should speak to your accountant to determine your cash flow needs and whether the acquisition of a revolving credit facility is in your best interest. If you have additional questions whether or not your business is suitable for a business line of credit then you may also want to a specialty business advisor that has an extensive understanding of business credt.
Business LOC is a specially designed website for entrepreneurs that are seeking to raise capital for their startups, small businesses, and expanding existing businesses. The focus of the site is on Business Lines of Credit.