Small Business Loans

Small business loans are available through a variety of sources including banks and other financial institutions. Contrary to popular belief, small business loans are not made by the government. Instead, the Small Business Administration (SBA) may offer backing to qualified loan applications. If a loan and lender meet criteria established by the SBA loan programs, then the loan is eligible for a guarantee of repayment by the SBA. In theory at least, "SBA loans" are less risky for lenders and therefore should be easier to get than some other options. However, in practice, many small businesses will find it difficult to qualify for small business loans and SBA loan programs.

There are nearly six million small businesses in the United States today and many are in need of resources for continued stability and growth. There are approximately 10,000 lending institutions that provide loans to large businesses, but the small business owner often runs into difficulty when trying to qualify for small business loans.

Most small business loans have strict guidelines for qualification. The lenders usually require an above average individual credit score of the business owner(s), personal collateral, and could require a significant down payment to even consider an application for a small business loan. The problem is that many small business owners struggle with one or more of these requirements and so many small businesses will simply not qualify for small business loans - despite the need for working capital.

It is important for a small business owner to realize that loans are not typically the only financial option available. There might be a variety of different ways to approach handling the financial needs of the business, and many of these options are much more flexible and responsive than small business loans.

A Merchant Cash Advance from AdvanceMe is one such option, and thousands of businesses have successfully used it instead of using small business loans. Our customers appreciate the intrinsic differences found between small business loans and Merchant Cash Advances.

A Merchant Cash Advance is not a loan product, so it operates under a different set of rules and covenants. Merchant Cash Advances build on the strength of a business' future credit and debit card sales, so many businesses find the requirements for qualification less demanding than the qualifications of small business loans.

For example, AdvanceMe does not require personal collateral for a Merchant Cash Advance. Additionally, while the credit score of the business owner(s) is reviewed as part of the qualification process, this score holds much less weight for the business than it does in qualifying the business for working capital from a traditional financial institution. A damaged personal credit history of a business owner may be an automatic disqualifier for the business' application for some small business loans, but this is not the case with a Merchant Cash Advance. It can also take weeks or even longer to secure a business loan while a Merchant Cash Advance can put cash in-hand in as little as 72 hours.

Though small business loans can be an effective means to handle a variety of financial issues, it is important for a small business owner to understand all of their possibilities. Through understanding the benefits and limitations of each financial opportunity, the small business owner will be better prepared to match their unique need to the best solution.