Small Business | Business Loans

The Secret GOP Plan For Small Business

August 30, 2012 By loans Leave a Comment

Like many of you last night I was watching Mork & Mindy because it was the episode when Mork runs away because he thought he was being a burden on Mindy. Actually, it was the 4th episode where Mork ran away for that same reason.

I needed some emotional, but light television last night because I was knee deep in decision making about my business. During a commercial break I turned to catch a little Big Brother but to my surprise it had be preempted by some type of flash mob called the Republican National Convention.

I was thrilled to stumble across this because I new they would have some answers for me, like they always do. There was a fella called Paul Ryan up there talking about how the Republicans had a plan to create 12 million jobs if we voted Mitt Romney as the President.

What was this secret plan, and how did it work? Which 12 million of us got the jobs and how would we know where to go when we kissed our heterosexual life partner on the cheeck and drove off into the middle class sunrise. I was hanging on the edge of my for nearly 2 seconds until he changed the subject.

If Mitt Romney really knew how he was going to create 12 million jobs I don’t think he would tell the guy who’s a plate of bad clams away from becoming president and taking all the credit for the plan they don’t even have in the first place.

But the important thing is that they said they had the plan. And that is really all the American People deserve to hear. As a nation we tend to get caught up in the details of these plans and that can really spoil the effect of perfectly manicured speeches. You know the kind where the guy walks and asks you to bare with him because he’s under the weather and he starts softly with a few statements and then a few creshendo moments ending with a towel wiping the brow sweat and yelling at the opposition.

I’m going to say that since the hopeful leaders of our country say they have a 12 million jobs plan, then I will believe them because I am an american and their party line is to never underestimate the stupidity of the American public. And, hey that’s me!

But as they try to slip this by unchecked I would like to point out the challenge set out that their plan will create 12 million jobs only with a GOP victory. This implies that if President Obama remains president, these guys won’t tell him whey they are hiding the jobs.

So if you don’t vote for Mitt, you aint getting no job. That doesn’t seem fair, but it certainly seems american. Maybe they could give us a handful of those millions of jobs.

This is the part of politics that has to leave the small business community pulling their hairs out because smallbiz is the key to both parties plans of turning the economy around. Maybe during Paul Ryan’s speech, somebody should have run up and tickled him relentlessly until the secret leaked right out. Then we could have all seen it.

Even though the dog and pony show isn’t over we have read that they are forthcoming and detailed about their plans. Unfortunately they were the ones who wrote down so we could read it. It doesn’t not make sense. They will ask us to vote based on the speeches where the people who paid a lot of money to be there and then to stand up and clap for them.

What does this all mean for the middle class and small business? It means the same thing as the plan in 1776 meant. It’s none of our business because they don’t gotta plan. Thankfully I do.

My plan, and your plan, is business as usual. You do not have to go to a big bank to get favorable business loans with lots of restrictions on how you as the business owner can spend your proceeds because they banks before gave bad loans.

You do not have accept grants to run your business the way the grant giver wants you to run your business. You can get an unsecured loan based on your personal credit for a minimum of $50,000 that you do whatever you want with. You can pay down debt, hire our of work people from the losing campaign, invest in machinery or anything you would like.

You see while the dig dongs on capital hill are busy trying to trick into voting for the one that may only govern you not that badly. You could focus on the issues and not the party, take control of your business to turn to people that will help you for all the right reasons.

Filed Under: Business Loans Tagged With: GOB, Middle Class, Mitt Rommney, Small Business

New Jersey Business Loans

December 7, 2011 By loans Leave a Comment

New Jersey Business Loans In our efforts to keep our business loans audience aware of happenings concerning them and their local states, today we focus on news out of New Jersey. It may come as a surprise to many that each state is yet to have a fully viable business loans program that offers favorable terms to small business, but New Jersey now hopes to rectify that.

Proposal (S-3052) which aims to help New Jersey small business owners with a commitment to hiring gain access to capital was introduced and approved by the State Assembly earlier this week and is now on its way to the desk of Governor Chris Christie.

The proposal comes with plenty of red tape but for those well qualified businesses, the effort will be worth it. Business Loans up to $250,000 may be provided at rates as low as 2% for businesses who will work toward increasing their hires by 10% over the next 4 years. The proceeds do not need to be earmarked for salaries per say. Monies can be used for capital purchases or other necessary business investment which will support the framework for future hires.

Any independently operated and owned New Jersey based business which currently employs fewer than one hundred people and has raised less than $10 million in equity financing or has received $10 million or less in monies from other sources is encouraged to apply through the state’s Economic Development Authority.

One of the most interesting facts about the New Jersey program is that its operating costs will be covered by the loan repayments and not be subsidized by the taxpayers. With unemployment approaching 10% within New Jersey, burdened taxpayers will likely applaud the program as opposed to other state programs which have been plagued by criticism.

While certainly not a program for the “every man”, we applaud New Jersey for understand that there is a true need to get money into the hands of small business which is the driving force of any real hopes of an economic recovery. There have been less politicians looking to gain political capital by attaching their names to the legislation as we have seen in other states so this proposal may be better intended and more viable skeptics may argue.

But, those New Jersey small business is desperate need of capital that do not have good business credit will not be welcomed with open arms. These business loans are intended for attractive borrowers with good credit histories and solid business plans moving forward over the next several years. From this perspective it may seem like empty promises from Government but taking bad lending risks and becoming business partners in sub par ventures should not be the role of Government and the buck has to stop somewhere.

Non traditional lending sources are still out there servicing start-ups and entrepreneurial ventures and rates are plenty favorable. For those owners with good personal credit, there are even unsecured business loans available with interest deferrals and minimum loan amounts of $50,000 and higher. There are few, if any, restrictions on how proceeds are earmarked and can even be used to restructure current debt which is never an option within the state programs.

Even businesses who are suited for the New Jersey Business Loans program, when it goes into effect, may find they are more comfortable with the terms they can get elsewhere because they allow more freedom and flexibility to manage their operations as they see fit.

Filed Under: Business Loans Tagged With: Business Loans, New Jersey Business Loans, Small Business

Michigan Business Loans Program Serves As Model

November 19, 2011 By loans Leave a Comment

michigan small business loans The Michigan Business Loans Program should serve as a model for the rest of the States trying to spur local lending but Michigan faces deeper challenges than most. Remember that the federal government has earmarked special funds for state lending programs over the last 2 years but nobody is calling any these programs a whopping success.

We had made mention of the Michigan Business Loans program some time ago as it began with little fanfare but now it should serve as a model for others because the general intent of the program is being honored. The intent is nothing more than to think and act locally. The Federal mantra has been that the small business sector would fuel job creation and expansion which, in turn, would help jump start the economy.

The SBA business loans which actually could have helped turn our economy around were grossly mismanaged and the time it took for community banks to understand the guidelines, apply for entry and actually participate in the programs was enough to stall the pipeline before it started. We can take comfort in the fact that it is business as usual in Washington as these loan programs were never anything more than political posturing for statesmen looking to calm the nerves of constituents.

In reality, the Michigan program was no different than any other but they have stayed the course and found ways to bolster investment in their Pure Michigan Business Connect program which encourages business in the state to support other local businesses. Borrowing at home to invest at home seems to be a better plan than waiting for SBA backed money to trickle in.

In this case, Fifth Third Bank has agreed to lend up to $2.5 billion to Michigan businesses next year. Although they are Ohio based, there is no border war here. Working closely with the administrators of the Michigan program, Fifth Third can get a better understanding of the local economy and make business loans which make sense for the entire community. Michigan has been hit harder than most states and keeping money local is the best way to stop the bleeding.

Throwing money at Michiganders does not guarantee a Michigan comeback but the way it is being done will assure that business with good financial history and solid business plans will have access to quality business loans. Having said that, it is important to note that these loans are not gifts for people with the right address. Just because you have a business in Michigan and need capital does not make you a candidate for a loan.

These loans only for the well qualified. Underwriters are extremely diligent in the approval process because they are now held more accountable for the loans that go bad. This is exactly how it should be but may not be the news the small business wants to hear. There are very worthy borrowers out there who look bad on paper due to their actions over the last few years.

Responsible business owners have had to take on more debt and absorb the burdens of running a business during lean times. Although they should be rewarded for keeping the doors open, enduring the costs of salaries and being on the front lines for a recovery, they will not be. The restrictions on these loans make it difficult to restructure current debt so business owners looking for a band aid to stop their bleeding may have to look elsewhere.

There are many ways to get business loans for those with a few dings on their business credit and lenders are definitely lending. But, the reason the Michigan Business Loans program should be a model for other states is because by definition it attracts business development unlike other states like California. For any Michigan business not yet eligible for loans within the program, building their business credit using unsecured business loans will get them ready to qualify by establishing a good repayment history.

Filed Under: Business Loans Tagged With: Business Loans, SBA, Small Business

Attractive Borrowers Get Business Loans

October 8, 2011 By loans Leave a Comment

It has always been quite obvious that when trying to secure business loans, your business needs to be appealing to lenders. People tend to lose site of this fact and wonder why they are having a hard time. Today’s economic conditions warrant a whole slew of different reasons for loan approvals or denials so becoming more attractive to lenders is more important than ever.

New government regulations, although well intended, have created significant problems in the industry. In the past, business loans were pushed through the application process with reckless abandon and problem borrowers were pushed down the line to become someone else’s problem. Now, regulators demand more accountability and banks are required to seriously vet potential borrowers.

This is obviously a very good thing for banking, but while potentially problematic business loans are denied for good reason, many potential good financings are left on the table. This creates a problem for operations deserving of consideration from traditional lenders because banks are not held accountable for passing up good opportunities, they are just accountable for the bad ones.

Is It Hard To Find Business Loans?

In the current environment, if you want to secure capital, you need to try and be the prettiest girl in the room. Sometimes this can be achieved by attending a small party instead of trying to stand out in a stadium filled rock concert. The recent changes in banking regulations have required large banks to significantly beef up their reserves which translates into far less capital to be available for lending. Smaller banks with under $10 billion are not subject to this requirement and therefor may have more ability to lend.

Another important factor in becoming more attractive is to have a good story to tell. Unfortunately over the last few years businesses have had a hard time showing that there ventures are on the upswing. If you can’t show good solid growth, then finding a non-traditional lender whose financings do not have to fit into a precise mold may be better instead of wasting time applying to large institutions.

Seek Business Loans At Smaller Banks

Next, when applying for business loans, especially for a start up, lenders like to see that applicants have some experience in their chosen fields. Borrowers who have at least 3 years in a given field and are willing to, or have already, invested their own money into a venture in that industry are much more attractive borrowers than those with no experience at all. Also along these lines is the fact that showing that real customers, or at least a compelling market, for your products or services already exist is an advantage. If there is an opportunity to purchase an existing business rather than starting from scratch, then it could help make you more attractive to lenders.

And then of course there is credit history. Lenders need borrowers to be credit worthy and show the ability to repay any loan they fund. Having other assets and showing liquidity is important but for those with little credit worthiness there are always unsecured business loans. These types of loans will help an owners establish business credit and a repayment history in order to become more attractive in the future. The rates are competitive and the programs have few restrictions governing how proceeds are used. Trying for business loans at this type of smaller party may be the key to securing financing in the current economic climate.
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Filed Under: Business Loans Tagged With: Business Loans, Small Business

Business Loans Get Another Round Of Funding

September 29, 2011 By loans Leave a Comment

Word on the street is that business loans are about to become easier to find but we have heard this type of news before. The treasury announced that the final disbursements of funds will be made to participating community banks as part of the Small Business Lending Fund. As you may recall, this was legislation from the Obama Administration designed to help jump start the lagging economy be getting capital into the hands of small business owners.

From the start, this business loans program was criticized for being way too slow to have any real effect on the economy and seen as nothing more than political posturing by politician looking to capitalize on the issue of job creation. It is a common belief that the small business sector is the key to creating jobs quickly and providing capital at attractive rates would be a way to convince small business to start borrowing again.

The latest disbursement of funds sees 141 small and community banks receiving $1.6billion to lend which brings the program total to over $4billion since its inception. But has the program really provided easy access small business loans to those who really may hire or invest in other aspects of their current operations? Of course not! It is late 2011 and this program should have been in high gear in 2010. It was a reaction to the credit crunch of 2008 and time gap is simply too wide to benefit those it was intended for.

The reasons for the delays were many but there is an overriding feeling that the Government felt pressure to act responsibly with tax payer money. They picked a fine time to add that to the equation and a great cost to those who really may have been entitled to this bailout. Banks received help after pushing through loan requests without merit and these banks may not be the best vehicle to disburse these funds.

Better Type Of Business Loans?

The track record of banks is miserable and it seems they have been given a double dose of chances and plan to show the world that they are now responsible lenders. Gone are the days of underwriting with blinders on and each applicant must prove to be a credit worthy risk. This is exactly how banking should be, but small businesses who have been holding on to their sinking ships until help arrived may be out of luck.

There is no reason to assume that business owners who apply for these small business loans will make it through the process. Applying is confusing and frustrating because there is no quick qualifying option so applicants may wait months to find out that they are not worthy candidates. Further, there are restrictions on how proceeds of these business loans can be appropriated. For example, funds cannot be used to pay down existing debt.

Debt is the most common issue for small business owners who maxed out credit lines and went into to full hock to try and ride out the poor economy. Paying down debt is one of the main reasons to apply for such attractive SBA loans and for those who are not aware of this stipulation, there may be rough waters ahead. But, the news is not all bad.

While the Treasury spends late 2011 patting itself on the back for another irrelevant job well done, nontraditional lenders are hard at work providing capital to just about every type of small business out there. The entrepreneurial spirit is based on a certain amount of risk and many lenders look to reward this quality in their borrowers. Hiring is a risk. Investing in new inventory and machinery for production are others, but certain lenders understand that this is all part of economic recovery and are willing to allow small businesses owners to make their own decisions about appropriating funds.

Filed Under: Business Loans Tagged With: Business Loans, SBA Loans, Small Business, small business lending fund

Credit Downgrade May Not Affect Small Business

August 11, 2011 By loans Leave a Comment

Saying that the recent Standard & Poors’s credit downgrade may not affect Small Business may seem like a stretch but for securing business loans and launching a start up in this economy is not really a bad idea. The entrepreneurial spirit is alive and well in the United States and has been since its inception. To be successful in business you must take risks and that has always been the mindset during any economy.

Small business owners received a pep talk of sorts at a Los Angeles conference on Thursday. Attendees of the California Small Business Development Centers conference were encouraged the news that the disheartening news we hear out of Wall Street is not necessarily a bad thing. As long as people have solid business plans and access to business loans start-ups will be fine. In fact, it is a generally accepted theory that these same start-ups will lead the economy into recovery.

It’s a simple theory and makes sense if you realize that small businesses have always been pretty much on their own when it comes to the economy and do not share in the benefits the power to orchestrate economic policy. Individually they are not too big to fail or big enough to matter in the grand scheme of things. It doesn’t mean that panic created in the media over economic trends does not directly affect these businesses but downturns, sometimes devastating can create opportunity for resourceful entrepreneurs.

So many businesses focus on survival when times are tough and the economic forecasts are even tougher, that there actually may be less competition for start-ups in certain industries. It does not mean there might be less competition for traditional business loans because established businesses are in need of financing but certain SBA guidelines say that proceeds from a business loan cannot be used to pay down existing debt.

So how can your start-up capitalize on Standard and Poor’s credit downgrade? The truth is to just stay positive and realize the opportunities in front of you. People may be afraid to spend money right now but they are not afraid to lend it. Having no business credit or poor credit shouldn’t be a deterrent either because for new businesses, traditional SBA Loans were never a slam dunk. The application process is slow and confusing and the underwriting guidelines have gotten tougher even though the government has lowered fees and raised the amount they will guarantee.

As mentioned above, the headlines don’t necessarily affect small business as a whole and from a borrowing standpoint things are better than normal. If you have a healthy credit record than the SBA has some great programs. But for those who do not, unsecured business loans have remained, and will always remain, a viable option. In the current economy they may be preferable.

Rates are currently low and start-ups can get business loans based on the personal credit of the principle owner. There are no requirements on how the proceeds are used and the interest may even be deferred. Benefits like these are not available under any SBA program so taking the time to investigate this type of business loans may be worth your while. No reputable company should charge for a pre-qualification and your should find out quickly if unsecured capital is an option for you.

Filed Under: Business Loans Tagged With: Business Loans, SBA, Small Business, standard and poor's

Federal Business Loan Funds For California

August 4, 2011 By loans Leave a Comment

So it seems that all the news lately regarding business loans has been about federal money finally hitting the individual State small business lending funds. Well California is no different and it is time announce that funds are trickling in from Washington.

Now don’t think they are coming directly to the small business owners who so desperately need them, they are filtering in through community banks which make up the front lines of the small business lending. It is really the right way to do it but borrowers who have been licking their chops since the announcement of these funds more than a year ago will need to be prepared to jump through some major hoops to cash in. Most notably, good business credit.

The United States Treasury is indeed is spreading the money from the Small Business Lending fund to California but for many it is nothing more than a psychological lift. Just knowing that their will be investment into the community banks responsible for doling out business loans might be enough to get business owners to start thinking about borrowing again, but it won’t be enough to get all the lenders lending.

Banks have taken a beating for their weak underwriting guidelines and poor management since the crunch of 2008 and they do not want to be known collectively for the failure of these flawed lending programs. Flawed in the sense that they have arrived a little to late to help those they were supposed to be designed to help. The California banks now in position to bolster local investment may be the very institutions turning away applicants in droves.

It will not be intentional of course, but the news that funds are available will plant the idea into borrowers heads that it is time to borrow for their businesses whether or not they are attractive to community lenders. This is just the state of things today and borrowers should not be discouraged.

Entrepreneurs Seek Unsecured Business Loans

This is the time for Entrepreneurs and Start-Ups to look for capital but not necessarily in the places they expect. The SBA Lending programs are for well qualified entities with good business credit and solid business plans. In other words, lower perceived risk. But that is not what will spur real job creation and turn the economy around as proposed by the politicians who backed these bills.

The entrepreneurial spirit is alive and well in America and finding business loans will take as much creativity as some of the ventures themselves. Well, that is if borrowers want to go the traditional route. SBA lenders are not going to just hand out money like in the days of old. There are use of funds guidelines and even required business management training so the days of unfettered business loans backed by the government are over.

Fortunately, the increased demand for funds will bring more prospective borrowers to research alternative lender sources like unsecured business loans from companies like Seed Capital who have extensive relationships with capital providers ready to lend.

Unsecured business loans have certain advantages borrowers might not even be aware of. They include lower interest rates, deferred interest payment, minimum guarantee of $50,000 and establishment of business history. These are all very beneficial to entrepreneurs and start-ups, so filling out a free pre-qualification form may be the perfect place to start searching for funds.

Filed Under: Business Loans Tagged With: SBA, Small Business, Unsecured Business Loans

Business Loan Demand On The Rise

August 2, 2011 By loans Leave a Comment

Small Business Loan Demand Is Up

Checking the PayNet Small Business lending index is a great idea when trying to analyze business loans information. The index was up in June and grew by a quarter over the same period in 2010. The PayNet Index is the chief economic indicator of small business finance so it is something we check in on often.

The fact that it is the highest it has been since the before the credit crunch of 2008 is all fine and good but what does it mean for people looking for business loans to keep their operations up and running? Quite a bit actually if you believe that small business borrowing is what fuels new hiring over all sectors of the economy. This is a fair assumption because small businesses really are what America is all about and technically a small business is one that employs less than 500 workers. So they are not all Mom & Pop operations by any means.

Nobody really cares about index results and percentages but the news for June combined with numbers showing less delinquencies for business loans in general show things may be looking up going into the next quarter.

With Demand for Business Loans Up, are they easier to get?

Not necessarily, but worry not because business loans have always been easy to get provided you know where to look. This has been the challenge for most small business owners in the past but once they are educated about all their financing options, the process becomes simple.

With the promise by recent SBA Programs for access to easy business loans, many Entrepreneurs are surprised to find that they don’t qualify or that the process is confusing. Lenders are still tight with their funds regardless of the SBA’s idea to reduce fees and raise guarantees to try and lower the risk exposure for capital providers, but this has resulted in a very predictable trend. Getting money is easy if you are worthy. Or, in other words, the rich get richer.

Now more than ever, the community banks responsible for doling out all these new funds are regulated more stringently than ever and are on the hook for poor quality control. So those with excellent business credit and air tight business plans are the ones who will get the business loans.

Business Loans for Start Ups

The excitement of being a start up is often short lived when you realize your business credit is nonexistent and access to funds through traditional SBA loan programs can be difficult. But it is actually a position of power. It forces owners to hit the street and explore their options. It turns out that SBA loans are not always the most interest friendly and the restrictions on how funds are to be used can limiting.

Seeking out an unsecured business loan from a company like Seed Capital can actually be a better alternative. Seed Capital can guarantee a minimum of $50,000 for business owners who get pre-qualified at no cost. Once successful, the interest can often be deferred for up to a year which will save a business thousands of dollars suring that time. The end result is often easier access to funds, lower interest and the establishment of health business credit.

Being that there are no restrictions to how an owner uses their business loans, they are free to start operating without entering the SBA training programs required for start-ups to qualify for traditional loans. So while the indicators such as the PayNet show an increase in business loans demand, it’s important to clarify who is getting these loans and does it really mean a boost to small business owners desperate for operating cash.

Filed Under: Business Loans Tagged With: Business Loans, SBA, Small Business

Business Loans Program For South Carolina

July 29, 2011 By loans Leave a Comment

Last week we made mention of a new business loans program in Michigan and now on Tuesday we will hear the announcement of a new business loans program in South Carolina. We are definitely looking a trend here but a trend of what?

At the end of 2010 the SBA promised an injection of lending capital into the hands of small business owners to help prime the economy and create jobs. A very well intended initiative to say the least, but the theory was far better than the reality.

These funds were thought to be the help business owners needed in order to keep thrir doors open and weather the storm created by the bad economy. In many respects it could have helped but the problem was the time it would take to get that money out there. We heard so much about this and how wonderful or politicians were but where was the money.

As we approach August 2011, it is starting to trickle in to the hands of the States who are developing business loans programs. Now South Carolina’s business loans program will take center stage and we will have to wait a few months before we can safely declare that it was a failure. Why such a pessimistic view?

Simple, it is the announcement itself.

South Carolina has been awarded $18 million from the federal government to create a capital access program for credit-worthy small businesses.

While best business practices say that you should only lend money to credit worthy businesses, these are not the only businesses needing help. In today’s economy, these credit worthy businesses for the most part have survived the storm, and while they deserve praise and easy access to funds, it’s those businesses who have lost their credit worthiness due to the poor economy that we must help.

The South Carolina business loan program will be loaded with restrictions and red tape like others we will see popping up in states around the country. And while the politicians shake each others hands and look for photo ops in front of some of the businesses who were able to survive the application process, the real struggling small business owner will be waiting for a lifeline that will never arrive.

The real problem with these business loans programs is the application process. Their are so many rules, regulations and restrictions that the process takes a long time and time is something many of us do not have. There is know way to really know up front if your business will qualify for the program or not without actually going through the process. So while those who receive loans should be thrilled, they are putting all their eggs in one basked. And we are dealing with a government backed basket at that.

So as the news of more business loans programs grows so does the amount of rejections for businesses who come to believe this is their only option. It is a GREAT options, but not the only one. For those with less than stellar business credit, unsecured business loans are a viable option for several reasons.

The benefits of unsecured business loans:

not regulated by the SBA
can be based on a business owners personal credit
usually free to qualify for
reasonable rates with no collateral
can be used for whatever an owner chooses
help establish good business credit history.

There you have it, another option for people looking for business loans who may believe they don’t qualify for the South Carolina business loans program or any other SBA program. Regardless of what state your business is in, a company like Seed Capital can get pre-qualified for an unsecured business loan of at least $50,000 without any obligation.

Filed Under: Business Loans Tagged With: Business Loans, SBA, Small Business, South Carolina Business Loans Program

Merchant Cash Advance Not A Great Idea

July 28, 2011 By loans Leave a Comment

While scouring the papers for the latest and greatest in business loans news, I came across a Press Release advertising Merchant Cash Advances. I’ve touched on them before as I’ve received many inquiries about them but do believe that a Merchant Cash Advance is not a great idea.

However, the marketing is slick and although they differ greatly from traditional business loans, I do want discuss it further. For the most part a Merchant Cash Advance is given to a company that accepts credit cards as a form of payment from their customers in exchange for a percentage of future sales.

Sounds pretty good to me but the idea here is that the lender makes money based on future revenue ( in addition to fees). In turn, it seems like if the business owner has diminished sales then they would not have to pay back as much.

Business Loans v. Merchant Cash Advance

Do not fall into this trap. What most do not realize is that these cash advances are very short term. They average about 4 months and therefore would equate to repayment terms which far exceed a business loan. It is simply not a good way to manage money while trying to run a business.

But, access to quick cash has a very strong appeal and this is what is such a temptation for those with money problems. Merchant Cash Advances are not considered business loans and as a result are governed by the state and federal laws which regulate business loans. This is a great workaround for both borrower and lender but being that the process is greatly unchecked, it lends itself to becoming a predatory market.

Lack of regulation means lack of underwriting guidelines and in exchange for higher risk, the lender naturally charges higher fees and significantly higher interest rates. The money is available literally overnight and borrowers with heavy debt and bad credit are encouraged to apply. I don’t want to sound too alarmest but these loans mirror personal cash advances in that they extended to people in trouble who think they have nowhere else to turn. A business borrowing in this manner is likely in a world of trouble and this type of borrowing will probably exacerbate the problems instead of correcting them.

Having said this, it is important to note that over the last 6 months, demand for these types of advances has risen and internet searches for them has gone through the roof. Some companies are extending the repayment periods to 1 year in order to try and make the product more appealing to hesitant business owners and the tactic seems to be working. Some companies are even toying with the idea of extending advances to merchants who do not even take credit cards. But is a Merchant Cash Advance something worth looking into because business loans are hard to get?

But Business Loans Are Hard To Get

I say not, because I just don’t see the upside. They are far easier to get than traditional business loans but do not let that sway you. There are plenty of alternatives and an unsecured business loan is certainly an option. An unsecured business loan is a loan extended based on a business owner’s personal credit history and is not tied to any collateral.

This is perfect for a new or young entity with little or no business credit history. It will not only help establish business credit but allow borrowers to spend the money as they see fit without the type of restrictions often levied by SBA Loans. The rates are far better than SBA Loans and the repayment periods are not limited. Applicants are pre-qualified for free and are not obligated to accept any business loans offered during process so it is definitely worth looking in to before getting involved with a merchant cash advance.

Filed Under: Business Loans Tagged With: business loan, Merchant Cash Advance, Small Business