Deciding Between a Business Loan and a Business Cash Advance? Things You should Know

Trying to decide between a business loan and a business cash advance? There are things you should know

Getting a business loan is a big decision. Depending on how you use it; it could have a major impact on your business. In some cases it can either make or break it. There are other times however that getting a business loan isn’t a choice at all but a necessity.

Whatever your reasons for getting the loan I think we can all agree that it is best to do a little homework before signing any papers. It is the purpose of this article to help clarify some of the major differences between tradition business loans from a bank and a relatively new way of getting working capital called a business cash advance (or merchant loan).

Business loans

The first bit of advice I will offer is that if your credit is good and you have time and collateral; then a business loan may be your best option. The reason for this is simple; the cost. It is pretty well established that a bank loan is less expensive and you generally have longer to pay it back.

The downside to business loans is that they are increasingly difficult to get. Other issues are that they require a ton of paperwork and can take upwards to 2 or 3 months before you get funded.

Like I said; if you have good credit and plenty of time, this may be the better choice.

Business cash advances

But what if your credit is less than perfect? What if you can’t wait several weeks to get your money? Maybe you don’t own property or have anything that would be considered collateral.

The real benefit of a business cash advance is that if you own a business and accept credit cards; then chances are you will get approved. And even though they are more expensive; it can still have a tremendous impact on your business.

Other benefits include quick funding, an extremely easy application process, and that collateral is no longer a requirement.

How a business cash advance works

In order to make merchant loans available to a wider range of businesses, they had to remove some of the obstacles and minimize the risk associated with lending money. Rather than relying on your credit history as the basis for approving your loan; they look at your businesses proven track record of sales… focusing primarily on your credit card sales. They then advance you the money based upon those credit card sales which you in turn pay back with a percentage of your daily credit card sales directly through your credit card processor.

This automatic payback reduces the risks and makes paying back the cash advance effortless. The typical percentage that is used to pay back the advance is between 10% and 25% depending on many factors. They do not touch your cash or American Express sales at all.

Because the use a percentage of your daily Visa/MasterCard sales; the amount you pay back each day fluctuates depending on your sales volume for that day. The significance of this is that when business is slow; you pay back less, making it that much easier to pay back the cash advance.

So there you have it. Both funding options have their benefits and drawbacks. If you’ve already applied for a business loan and have been turned down; I suggest you consider looking into a merchant loan a little more closely. Thousands of small business owners have made this funding option grow exponentially each year since its inception about 10 years ago.

I invite you to visit my site to learn what a business cash advance has to offer or even get a free quote. The worst thing that could happen is that you might get turned down. Odds are you won’t.

www.businesscashadvanced.net
Use this link to learn more about a business cash advance