Business Today 911

The mode of financing is an important element that determines the success of the organization. Hence, it is mandatory for every business owner to have an exhaustive understanding about the available funding options. The two most preferred and popular financial options available with business owners include business cash advance and small business loans.

Small business loans are primarily business loans that are provided by banks and other financial organizations but are guaranteed under the Small Business Administration (SBA) Loan Guaranty Program. The biggest advantage of a small business loan is that these loans are provided at a lower interest rate. Getting approved for a small business loan is not an easy task. This is because there are hundreds of criteria that need to be fulfilled and tons of paperwork or documentation those needs to be submitted in case anybody has applied for a small business loan. Some of these criteria that are required in order to qualify for a small business loan are listed below.

1. Good Credit Scores: This is the foremost criterion that one needs to fulfill is to have an incredible credit score. Unfortunately, more than 92% of business owners in U.S don’t have decent credit scores.
2. Extensive documentation: Apart from the credit scores, the applicants also need to submit to the bank documents such as annual financial statements, audited tax returns and a properly documented and a well-written business plan that provides the lender with a complete picture about the business. Financial statements are required to assess the cash flow generated by the business.
3. Collateral or Personal Guarantee: It is not possible to get approved for a small business loan unless personal asset is pledged as collateral with the lender.

More than 90% of small business owners in U.S fail to qualify for small business loans as they are unable to fulfill one or more of the regulatory requirements being implemented by banks. Some banks don’t like to consider applications that have been submitted by business owners who are have bad credit or no credit problems and also those who don’t have enough collateral. Banks are apprehensive about extending loans to budding entrepreneurs who are either planning to start a new business venture or those who already have a small business firm. 

The only available solution for small business firms in these situations is to apply for a business cash advance. This financial option can be plainly described as an advance on a credit card. Small business firms can receive advance that ranges from $2,500 to $600,000 depending on the credit limit for their credit card. Obtaining a cash advance is simple, convenient and easy; it doesn’t require the applicant to submit any extensive documentation nor are his /her credit records verified. The loan gets approved instantly and one can receive cash within 7-10 days. The only requirement for obtaining a cash advance is that the business should accept Visa or Master Card or American Express credit cards as a mode of payment. Businesses don’t need to provide any personal guarantees or collateral in order to receive an advance. Repayment is based on the percentage of the merchant’s future credit card receipts. Apart from this, another benefit of a business cash advance is that the loan amount can be used for any business purpose.

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This entry was posted on Monday, November 10th, 2008 at 2:11 pm and is filed under Businesses product. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.