Why You Should Avoid High Risk Business Loans

High risk business loans are wrought with so many disadvantages that only the business people in desperate situations would consider them. The situation the borrower is in is always very clear to the lender and some have no qualms about taking full advantage of it.

Features of high risk business loans

One of the most unpleasant features of high risk business loans is that they tend to be very expensive. The lender normally feels that he’s assuming a big risk and to guard against the possibility of losing all the loaned money when the borrower defaults, he tries to take as much as possible back in the shortest time possible. The interest rates for these loans are therefore normally higher than those charged on low risk loans.

The repayment periods offered on high risk business loans are also relatively shorter than those offered for less risky loans. This combination of high rates and short repayment periods normally mean that the entire loan period might be very traumatic for the business owner.

While you could obtain an unsecured high risk loan, most such loans are secured. When you can provide some collateral, some lenders are willing to offer lower interest rates than those charged to people without collateral. Of course securing your loan with an important asset comes with its risks. Business is generally unpredictable and in the event that you are unable to repay the loan money the lender will have no option but to sell the security you offered. People securing their high risk business loans with precious assets take a particularly big risk as some lender actually have an eye on the asset used to secure the loan and will dispose of it at the slightest indication that you are having trouble paying.

Avoiding the risks

If you run a business that accepts credit cards and have been in business for a period of six months or more, you have no business going for a high risk business loan. A search online will show you that you have a more friendly source of funds in the form of merchant cash advances. With providers of merchant cash advances, your credit history or your ability to provide collateral is not important. All the provider wants to confirm is that the frequency of your credit card sales is good enough to make you make a profit from which you can commit some money to settle the money advanced.

To decide how much to lend you, the merchant cash advance provider takes your historical credit card sales into consideration and uses that to project what your future sales are likely to be. The amount you could obtain in the form of an advance under this arrangement will vary but it could run into several hundred thousand dollars.

With a merchant cash advance, you take no risk of losing any of your precious assets as none are used to secure the advance. Moreover, you are under no pressure whatsoever from the lender. A cash advance is only payable when you receive payments for your credit card sales and unless you realize such sales you are under no obligation to pay anything. Even in the unfortunate event of your business folding up, the entire cost of any outstanding cash advance will be borne by the lender.

Rather than take high risk business loans which could also have the effect of messing your credit rating further, you should consider using a merchant cash advance as whatever happens between you and the lender has really no bearing on your future credit reports.

Posted in: Bad Credit Business Financing

How to Obtain Business Loans with Bad Credit

For most small business owners, bad credit normally means that they cannot obtain the credit they desire. Even for the lucky few that have a way of going round this hurdle, the process is not only time-consuming but also expensive.

Unlike people with good credit ratings, people with bad credit are generally treated as potential defaulters and they pay for this perceived sin in the way of higher than normal interest rates. Bad as the situation might look, bad credit does not have to mean the end of the road for the business owner with bad credit so long as a few conditions can be fulfilled.

Offer collateral

Since the high interest rate charged people with bad credit is arrived at based on the assumption that the borrower risks defaulting, you could go round this by offering to secure your loan. When some security is provided, the lender not only appreciates your seriousness but also has something to fall on when the worst happens. Of course as a borrower you assume a big risk when you use some important asset to secure the loan because most lenders will sell the assets at the slightest excuse.

Where the seeker of business loans with bad credit cannot provide the security necessary, there aren’t many choices but to accept to pay the higher interest rates demanded by the lender.

Alternatives to business loans with bad credit

As a business owner with bad credit even obtaining the expensive loans from banks is near-impossible today. The plain truth is that there are plenty of people with sparkling credit who can hardly get loans so a borrower with bad credit will be somewhere very distant in the queue.

To avoid the problems associated with obtaining business loans with bad credit, you have the option of merchant cash advances which come at more friendly terms. For starters, providers of merchant cash advances are not in the least bothered by your credit rating and they have been known to give advances to people with the most tattered credit records. For a merchant cash advance provider, what really matters is your ability to pay and this is not reflected by your credit reports but by the records of your credit card sales.

So long as your business has a history of strong credit card sales and you have been in business for at least six months, you’ll easily qualify for a merchant cash advance.

When business owners with bad credit seek merchant cash advances, they avoid the agony of being kept on hold while the lender carries out appraisals. Where banks take weeks to let you know whether you’ll qualify for a loan or not, a merchant cash advance provider will provide this information in a single day. There are no mountains of documents to fill when you apply for a cash advance as all you’ll need is a single form which you can fill and send online.

Not only is the appraisal process fast, the approval rate among cash advance providers is also very high (it is as high as 90% among some providers). The process of disbursing funds is also fast and on approval you can expect to receive funds in a few days.

For seekers of business loans with bad credit, a merchant cash advance turns out to be not only easy to obtain but also cheaper. By accessing a cash advance, you save much time which you’d have wasted waiting for responses from your bank. Moreover, cash advances today are very affordable. With increased competition among the providers of this service, retrieval rates have plummeted and you are likely to get funds which are as cheap as those from the traditional lenders. To make sure that you obtain the best possible rates, it helps to shop around by talking to as many lenders as possible.

Posted in: Bad Credit Business Financing

Comparison of Bad Credit Business Loans and Merchant Cash Advances

Bad credit business loans and merchant cash advances are two of the most important sources of funding for many small business owners who are unable to obtain funding from the traditional sources of finance. The two financing options have several similarities and differences and before deciding whether to go for one or the other it would be prudent to weigh the pros and cons of both.

Similarities

Both bad credit business loans and merchant cash advances are made available to people whose credit scores have taken a battering. With bad credit business loans the lender will only consider to make funds available as long as the borrower is willing to consent to a higher interest rate than that charged borrowers with better credit records. The cost of a bad credit loan is therefore ultimately higher than that of a normal loan.

On their part, merchant cash advances will also tend to be more expensive than normal loans but this is influenced to a great extent by the retrieval rate that is agreed between the lender and borrower. In the past, that rate could be as high as 30% or more but changes in the merchant cash industry have seen the rates fall dramatically and the cost of these funds today has been reduced dramatically.

Differences

There are many differences between bad credit business loans and merchant cash advances and one of the most important differences is that to get the former you’ll most probably be required to provide some collateral while none is required for the latter. When no collateral is demanded for bad credit business loans the interest rate can be extremely high and this is the reality that most borrowers have to live with for many actually are either unwilling or unable to secure their loans.

With bad credit business loans, the borrower has to commit to pay a specific interest rate and the amounts due are payable every end of the month. With a merchant cash advance, the lender and the borrower agree on a retrieval percentage rate (which is the percentage of credit card sales that will be used to recover the money advanced). With a merchant cash advance, there are no time specifications – you only pay when you make credit card sales and there are no demands on you in the months when no such sales are realized. Neither the lender nor the borrower then can tell when the merchant cash advanced will be cleared. With a bad credit business loan, the life of the loan is known with precision.

The rates at which borrowers of bad credit business loans are made to pay interest are usually determined by their credit scores. People with better scores are usually able to negotiate better rates than those with completely tattered records. With merchant cash advances, your credit rating is of no consequence and most providers have no issue providing advance to businesses with the worst credit records.

While bad credit business loans and merchant cash advances have several similarities and differences, the advantages of merchant cash advantages far outweigh those of the bad credit business loans and, given a choice between two, it might make better business sense to go for a merchant cash advance.

Posted in: Expansion Financing

The Advantages of Merchant Cash Advance Funding

Merchant cash advances are one of the few funding options available for the business owner today. While this option was mainly used by those small business owners who could not obtain funding from the traditional sources such as banks, today it is the funding option of choice even for bigger business owners who have come to appreciate the many advantages that come with merchant cash advance funding.

Keeping off the loan pressure

Even for business owners who have no problem obtaining a bank loan, merchant cash advance funding is preferred because it keeps the creditors at bay. With a loan, you have to commit to pay a certain amount of money at the end of every month for a specific period of time. It matters not to your creditors whether you are making profits or that your business could actually be on its knees. Failure to pay has its consequences – since you might have been forced to provide some asset as security for the loan, the creditor could easily dispose of this asset to recover money lent. If that was your family home or an important business asset, it could actually mean the end of your business or the breakup of the family.

With merchant cash advance funding, you are under no such pressure. For starters, you are not required to provide any collateral for these advances so whatever happens to your business your home and assets will always be safe. Secondly, a cash advance is not a loan and you are therefore under no obligation to repay certain amounts at the end of each month. With a cash advance, you only pay when you realize credit card sales – if you are not making any such sales, you’ll not be required to make any payments. Even in the unfortunate event of the business winding up, the provider of merchant cash advance funding has no option but to absorb the entire loss.

Flexible use of funds

Unlike the traditional bank loan, funds obtained through merchant cash advance funding can be used in whatever way the business owner finds reasonable. This is of critical importance especially to the small business owner who has many needs chasing only a limited amount of funds. Once you obtain the funds, you could distribute them in various needy departments – you could use some money to buy new inventory, open a new branch, pay overdue staff salaries or even carry our renovations.

Were you to depend on a bank loan to do all these things, you’d have to apply for several loans as loan money can only be put into the very specific uses it was issued for. Several loans might not only be hard to qualify for but also come with different repayment terms and conditions. You might end up losing a lot of precious time and money just managing your loan portfolio.

No longer exorbitant

One of the greatest accusations leveled against providers of merchant cash advance funding has been that, since they operate with only a small measure of regulation, they tend to be usurious. Merchant cash advances are therefore thought to be unaffordable.

While there is some truth to this, the fact is that cash advances have continued to be more and more affordable so that with a careful search, you’ll find a provider whose terms are just as competitive as those of the traditional lenders.

Mainly due to increased competition among cash advance providers and the development of self-regulation, usurious providers have slowly but surely been forced out of business. Since a provider only gets paid when you get paid, you only risk getting exploited when you consent to a retrieval rate that your business cannot afford. This rate is not dictated to you by the merchant cash advance provider but is mutually agreed by both parties.

What you’ll notice today is that providers go to great lengths to explain what they’ll require of you and especially the retrieval rate that they expect. What this means is that there are many providers whose retrieval rates are less than 10% of your credit card sale profits. This is quite reasonable when you consider that majority of loans come at an interest rate above this percentage.

Posted in: Merchant Cash Advance

Obtaining a Fast Cash Advance for Your Business

Where does the small business owner run when he or she has to raise a fast cash advance? While your bank manager might come to mind when the emergency arises, chances are that you’ll not obtain any help there. Banks today have become extremely stingy and only a privileged few can hope to qualify for their loans.

When split-second decisions have to be made and money raised almost equally quickly, you might have no option better than a merchant cash advance. While these providers have many qualities that distinguish them from the traditional providers of credit, they are most distinctive for the speed at which they carry out their operations.

The merchant cash advance process

What makes the merchant cash advance process the choice of many business owners in search of fast cash is that it is extremely fast. Even the fastest operating bank will normally require some documentation which might include financial statements showing your current and projected income and your assets and liabilities together with your credit reports. The bank then takes its sweet time to analyze presented documentation and whatever assets you are providing as security before telling you whether you qualify for a loan or not. Some efficient banks could let you know the fate of your application in a day or two but some could take longer.

The time it takes your traditional cash provider to simply appraise your application could be longer than it’ll take a merchant cash advance provider to both carry out the appraisal and actually disburse funds. For these providers, all that is needed for your appraisal is a simple online form which you can fill in a few minutes, send to them and then get a response within the hour.

Where banks approve only a small percentage of all the applications they receive, merchant cash advance providers approve over 90% of applications. When your application for a fast cash advance for business has been approved, some providers are able to disburse funds in less than 48 hours.

With a fast cash advance for your business, you are also not required to provide any security. As long as you can provide evidence that you have been in business for a period not less than six months during which you have been making credit card sales, the merchant cash advance provider will only need to know what percentage of those credit sales profits you are able to commit to repay the amount you applied for. Once you agree on this percentage (aka the retrieval rate), the funds are disbursed and you’ll only be required to pay when you start making sales. When sales are higher, the amount recovered is high and vice versa. When no sales are made, the merchant cash advance provider gets nothing.

While a fast cash advance can be obtained quickly, the repayment will only be as quick or slow as your credit card sales dictate meaning that the business owner is never under pressure from the lender.

Posted in: Uncategorized

The Best Small Business Loans and Their Alternatives

It is no longer a secret that the small business owner who takes the journey in search of the best small business loans might have quite a bit of work to do. The credit situation in the country is pretty dire as providers of credit have continued to diminish. Discouraging as the situation might seem at first, there are still possibilities for the hardworking business person.

SBA loans

Since bank loans have become almost non-existent, one of the best small business loans you should consider looking for are those offered by the Small Business Administration (SBA). The SBA has several programs targeting the small business owner and it would be worthwhile to find out if you qualify for some of these.

Under the 7(a) Loan Program, the SBA provides loans to businesses which are perceived to have special requirements. You could qualify for these loans if your business is involved in the development of products for exports. Other loans under this program target businesses among minority communities and businesses based in the rural areas among others.

Another loan program you should look up when looking for the best small business loans is SBA’s Microloan Program. As the name suggests, the amounts dispensed under this program are minimal and will usually be less than $20,000 with the maximum amount obtainable being $50,000. You could apply for a Microloan to expand your business or purchase new equipment but you stand a really good chance of qualifying for these loans if your business is a not-for-profit child care center.

While SBA loans could prove better than loans from other lenders, the fight for them is usually stiff with the number of applicants far exceeding the amount of loan money available. Many small business owners who fail to qualify for normal bank loans might also have trouble qualifying for SBA loans since the provision of collateral (a key consideration with most bank loans) is also a requirement with the SBA loans. The Microloan, for instance, is offered through bank intermediaries who have very stringent requirements.

Merchant cash advances as an option

An alternative you should consider exploring when you are looking for the best small business loans is the merchant cash advance option. This is an industry that has grown in leaps and bounds over the past decade and which has provided the lifeline for small business owners who had been turned away elsewhere.

Obtaining a merchant cash advance is easier than obtaining any other source of funding since the strict requirements for collateral and an excellent credit record that other lenders ask for is considered of no significance by merchant cash advance providers. So long as you have been in business for a period of at least six months and accept credit card transactions, you might qualify for a cash advance. By simply looking at your sales records, a merchant cash advance provider can project your future sales and use that projection to advance you some cash. Most important for the person looking for the best small business loans is the fact that a cash advance is not a loan and can therefore be repaid at a more relaxed pace.

Posted in: Business Loans

How to Boost Your Business with a Cash Advance Online

Today, many small business owners move from one bank to another looking for small business funding and most are disappointed to discover that they do not qualify for such funding. The fact is that the demand for small business loans far outstrips the supply. The consequence is that only a tiny minority of loan seekers stand the slightest chance of obtaining such loans.

Even when you qualify for a loan from the traditional lenders, the appraisal process is so time-wasting that sometimes whatever funding you were looking for is made available when it is too late. Banks still insist on lending to people with impeccable credit histories and those who can provide security for the loan. Since time is money, the long process makes you lose money.

Saving time with a cash advance online

For the small business owner whose time is precious, the easy, fast and effective way to obtain business funding is through a cash advance online. Applying for such an advance is easy as there are plenty of providers as you’ll discover by carrying out an online search. The providers of cash advances do not require you to fill mountains of documents and are content to appraise you using a simple online form. This is a form you can complete in a few minutes and, on sending it to the potential lender; you can expect a response in a few hours. The approval rate among cash advance online providers is as high as 90% (banks have a rate lower than 60%) which means that you stand a high chance of getting approved.

On approval, many providers of cash advance online will have the money sent to your account in a few days. On average, cash advance providers take five days to process funds but there are also many providers who take less than two days. If you have the kind of emergency that cannot wait, this is the kind of cash advance provider to look for.

The process of appraising you for an online cash advance is fast because the lender is not bothered by your credit scores or your ability to provide collateral. The provider just requires evidence that you have a business that accepts credit card sales and that you have been in business for at least six months. Your credit card sales are used to project future sales and this projection is used to determine the amount that your business can be advanced.

The ability to raise cash advances online is especially important for business owners who might need an urgent cash injection to take advantage of seasonal demands. If you have to wait for bank loan approval, the product you desired to sell might no longer be in demand when the funds arrive. If you run the risk of losing customers because they are asking for products that you do not have, cash advance online could be your savior.

Cash advances come with many advantages to the business owner. Since they are not loans, your business is never under pressure to make the monthly payments that come with bank loans. Repayments are only due when you make credit card sales which also means that you might not notice how quickly you repay such advances.

Posted in: Merchant Cash Advance

Choosing Between Secured and Unsecured Loans

Should you be a business owner who is in the market looking for a business loan, what factors should you consider when deciding whether to settle for a secured or an unsecured loan? Both loan options have their advantages and disadvantages and you need to weigh these carefully for the benefit of your business.

Appeal of secured loans

Secured business loans make a lot of sense for people who qualify for them. The biggest appeal of secured loans is that lenders do not consider them high risk. The result is that such loans are issued at very attractive interest rates. To qualify for such loans, the borrower provides some kind of collateral to secure the loan. Moreover, part of the appraisal process for this kind of loan involves an evaluation of your credit history and most lenders will be looking to confirm that your credit record is impeccable. With these guarantees that you are not likely to default on the loan, most lenders will offer a loan at very low interest rates.

The main trouble with secured loans especially for the small business owner is the fact that many such businesses can hardly meet the demands made by lenders. Many have neither the ability nor willingness to provide security while some have bad credit histories and could therefore never qualify for secured loans.

The appeal of unsecured loans

Unsecured business loans are sometimes the only option available for small business owners and part of their appeal is the fact that a business owner does not need to provide any security for the loan.

To guard against the possibility of default, many lenders will impose a higher interest rate for unsecured loans than they do for the secured loans. While these loans could be easily available, the repayment might not be very easy for the borrower because most come with very short repayment periods. To make matters worse for the borrower, any attempts to get out of the loan obligation early by making a prepayment is usually penalized by the lenders.

Like secured loans, unsecured loans have also become increasingly harder to access in recent years and they are hardly an option for the small business owner in need of urgent cash. The appraisal and approval process for both kinds of loans is also rather protracted with the result that the applicant might lose a lot of precious time only to be told later that he did not qualify.

Business cash advances as a substitute for secured and unsecured loans

Small business owners who have trouble accessing either secured or unsecured loans have the option of applying for business cash advances. These advances come with the advantages of the unsecured loans but without some of the disadvantages. One similarity between unsecured loans and business cash advances is that both tend to be rather more expensive than secured loans but in certain situations you are likely to access cash advances that are cheaper than unsecured loans.

One of the greatest attractions of business cash advances is the fact that they are easy to get. The long appraisal process that you have to undergo when you apply for business loans is dispensed with as a simple online application is all that most cash advance providers require.

Since a cash advance is not a loan, the borrower is also never required to make monthly repayments as is the case with the two loan options. The advancer of the cash and the business owner agree on a percentage of credit card sales that will be set aside each time a sale is made to repay the money advanced. This therefore means that unless credit card sales are realized the lender cannot make any demands for payment.

Unlike a secured loan, no collateral is required for a business cash advance. Should the business fail, the provider of the advance absorbs the entire loss and cannot attach any of the business’ assets as they were not provided as collateral for the cash advance.

Posted in: Direct Cash Advance Lenders

Short Term and Long Term Sources of Equipment Financing For the Small Firm

Equipment financing tends to be rather expensive and many small business owners do not have the means of raising the necessary funds without outside help. To solve this problem, the small business owner could consider approaching either short term or long term providers of equipment financing.

Long term providers of equipment financing

A prime long term source of equipment financing for the small firm is the companies involved in equipment leasing. These could be the sellers of the equipment you wish to obtain or a bank that is willing to provide the loan money required to purchase the equipment. To qualify for financing from such a lender, the small business owner will require providing a report showing the viability of the equipment desired, its economic life and its resale value.

Moreover, to obtain funding from such a source, the small business owner will be required to have a great credit history and also to provide some security for the money loaned. In some instances, lenders are willing to use a percentage of the value of the equipment purchased to secure a loan. In such a situation, the equipment will cover about 65% of the loan while you will be required to provide security for the remaining 35%.

A lease is typically more expensive than a bank loan but it might be the most feasible way for the small business to go especially in the formative years when you cannot tell with certainty what the future of the business portends. Should your business fail, you’ll not be saddled with equipment that you might not need to use.

Short term providers of equipment financing

The kind of equipment financing that some small firms require could also be adequately handled by merchant cash advance companies. Where small firms are unable to meet the requirements made by banks, merchant cash advance companies are a viable and very convenient option.

Part of the reason why most small firms are unable to obtain equipment financing from banks and other traditional lenders is because such firms have poor credit records and are also unable to provide the security that the lenders demand.

To qualify for merchant cash advance, the applying small firm needs to have been in operation for a period of about 6 months during which it was making credit card sales. After analyzing your credit sales for the period under review, the merchant cash advance provider will be in a position to decide what your sales will be in the future and use those projections to immediately advance you cash. Depending on the strength of your sales, it is possible to raise amounts as high as $500,000 which you could then use to purchase the equipment required.

Why equipment financing via merchant cash advances could be better than through a bank loan

Part of the appeal of merchant cash advances is that they are not loans which have to be repaid over a specified period of time. The advances are a purchase of your future credit card sales which also means that they can only be repaid when such sales are realized. Should the business fail to make any credit card sales or go under, the cash provider will have no option but to absorb the loss. Since the advances are not secured, the business owner does also not risk losing any assets to the merchant cash advance company.

Merchant cash advances are also preferred by many business owners because, unlike bank loans, they are issued pretty quickly. If you are a small business owner who requires some new equipment urgently, the bank process might be too long to go through. Where the equipment is needed to take advantage of a seasonal demand, only the speed that merchant cash providers work with could help you. With these providers, it is possible to get you application approved and to get the project funded in less than a week.

Posted in: Expansion Capital

How a Retail Store Cash Advance Could Help Your Business

The profitability of a retail store depends to a considerable extent on sales turnover. Unlike some other businesses, the profit margins on most items sold in retail stores are rather low but a tidy profit will be made if the turnover is high. That is why it would be unthinkable for the owner of a retail store to run out of some fast moving goods. Yet, as inevitably happens, there is not always enough money to stock up as well as you would wish.

In addition to obtaining cash for new stocks, a retail store will regularly need fresh injections of cash for many other reasons. The needs could vary from paying staff salaries to carrying out urgently needed renovations or even paying taxes. In the moment of an urgent cash need, where does the retail store owner run to?

In the past, that question would have an obvious answer – your bank. Today however, obtaining bank loans for the small business owner, including retail store owners, is near-impossible. Of all funding sources, perhaps none would make more sense for a retail store owner than a retail store cash advance.

How does retail store cash advance work?

If you’re one of hundreds of thousands of small business owners who have been turned down by a bank, perhaps you should explore financing from a cash advance provider. Compared to other financing options, a retail store cash advance is rather easy to get and the repayment could be almost hassle free.

Where banks require you to fill huge amounts of documents and then keep you waiting for an eternity to know the fate of your application, a cash advance company will let you know whether you qualify in a matter of hours. Most providers are able to assess you using a simple online application. In the course of a few hours, you’ll know whether you qualify or not. It should be encouraging to note that while approval rates in the banks is less than 40% it is more than 90% among cash advance companies. Upon approval, you can expect the funds in a week or even less.

Repaying a cash advance

If you are used to the hassles of mandatory and fixed monthly payments that come with small business bank loans, a retail cash advance will give you peace of mind. A cash advance is not a loan but simply a purchase of your future credit card sales. For this reason, you are not bound to make any monthly payments and you’ll only be required to pay when you make credit card sales.

In months where no credit card sales are realized, no payment will be required. Since only a specified percentage of your credit card sales is used to recover cash advanced, the amounts you pay fluctuate from month to month. Most importantly for the small business owner who might be having trouble meeting monthly obligations, the worries that the end of the month come with now become a thing of the past. Even in the unfortunate incident of the business folding up, the cash advance company will bear the entire loss of the advance as no collateral is demanded to secure a cash advance.

Cash advances are not only easy to obtain and repay but can also be used in the most flexible way. Unlike small business bank loans which must be put to very specific uses, a retail store cash advance can be used in whatever way the business owner finds reasonable. You can therefore use the advance to buy new supplies, settle with creditors, pay taxes or even hire new staff. For the ailing retail store that is having trouble obtaining a loan from the traditional sources, a retail store cash advance could prove magical.

Posted in: Retail Store Cash Advance

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