Small Business Loans or Business Cash Advances

Small business owners may have one obvious thing in common (they own a small business), but they are all very different. Entrepreneurs have interests in various fields and as a result, there is a business out there to meet your every need. This is excellent for the millions of consumers out there, but if you’re a business owner, you’ve probably got some questions about where to get business financing, whether a small business loan is right for you and if you should try a business cash advance for the first time.

It is true that some businesses are perfect for advances, while others are better for business loans. Use the following guide to learn more about the differences between the two methods of business financing, and to find out which method of business financing is best for your business.

Small Business Loans

Small business loans are typically provided by banks and/or credit unions. Often, they have harder-to-meet requirements than business cash advances, but they are also less expensive. Many banks will require a credit score of at least 700, as well as collateral.

You will need to gather personal financial statements and develop a business plan to present to the bank or credit union. Your lender will most likely require you to make fixed monthly payments until your loan is paid off.

Business Cash Advance

Merchants can receive business cash advances in exchange for a small percentage of their business’s future credit card sales. There is no collateral required and a great credit score is not necessary. When applying for an advance, you will need to submit your two-page application, your last four months of merchant statements, a copy of your business lease and a voided business check.

Type of Business	Best Method of Business Financing	Why?
Startup	Small Business Loan	In order to receive a business cash advance, a business must have an established credit card processing track record of at least six months. Therefore, if you are just starting up and you need business funds to get your business off the ground, you should consider applying for a loan.
Restaurant	Business Cash Advance	Restaurant owners are great candidates for business cash advances. They process lots of credit card transactions and they can use their funds to expand, to purchase advertising, to repair equipment, etc. Many restaurant owners choose business cash advances because they are easy to qualify for and the repayment method is hassle –free, allowing busy restaurant owners to spend their time running their businesses and not worrying about repaying their business funds.
Non-Merchant	Small Business Loans	Non-merchant businesses cannot use business cash advances because they will not be able to partake in the unique repayment method that business cash advance providers offer. As mentioned above, business cash advance repayments are made when the provider automatically deducts a small percentage of the business’s daily credit card sales until the advance has been fully repaid.
Franchise	Business Cash Advance	Many business cash advance providers specialize in funding owners of franchises. Franchise owners can see how business cash advances have helped other franchise owners before applying for one of their own.

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