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. This makes, in theory at least, "SBA loans" less risky for lenders and therefore easier to get than unguaranteed financing options. However, in practice, most small businesses will find "SBA loans" very difficult to get.
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 traditional 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 credit score, personal collateral, and 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 financial option, and thousands of business owners 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 card sales, so the requirements for qualification are much less demanding than those of small business loans.
For example, AdvanceMe does not require a down payment or personal collateral for a Merchant Cash Advance. Additionally, while your credit score is reviewed as part of the qualification process, this score holds much less weight than it does in traditional financing scenarios. A damaged credit history may be an automatic disqualifier for 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. By clearly 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 possible solution.
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