Loans, Insurance & credit card information

All businesses will, at one point, need financial help in some way or another. Small business loans are a great way to maintain your business in a healthy financial position, but acquiring one can be a very complicated task, since the requirements for it are very extensive. Some of its most basic requirements are: Having a perfect credit score and having personal assets to use as collateral, that alone already makes it a hard to secure financial resource.

So, what’s left for the business owners with a poor credit history? The answer for that question is: look to an unsecured business cash advance. These types of cash advances are a great alternative to the traditional small business loans, some of the features that easily stand out are the fact that these types of advances don’t require any personal collateral as guarantee nor it requires that the merchant holds a perfect credit score and history. Of course there are some requirements, and the most basic ones are:

1) The merchant has to process credit cards as a form of payment and it has to have a monthly processing volume of at least $2500.

2) The merchant cannot have an open bankruptcy.

3) The merchant can’t have any tax lien (unless under a payments plan)

4) The merchant has to have at least 1 year remaining in its business location lease.

5) It has access to at least the past 4 months of credit card statements.

6) The business is 1 year old at least.

If compared with a small business loan, the application and funding process is very simple and fast. Merchants can apply online or over the phone. The application is a simple 2 pages form, and the documentation needed is very small. The approval process usually takes place in as fast as 24 hours, and after the merchant has been approved, the lender wires the funds in as little as 7 days.

In contrary to a business cash advance, being funded by a bank is a very complicated funding method. You, the merchant will need to provide the lender with all the pertinent documents showing that you can qualify for their loans, some of the requirements for secured loans are:

1) The merchant has to have a perfect credit score and history. Often times a FICO score of 750 or more is required.

2) The merchant needs to provide the lender with personal assets to be used as collateral.

Besides having those requirements, the approval process for a bank loan can take up to 2 months and the actual funding can take up to 4 to 6 months.

Cash advances don’t have fixed monthly payments, nor they have interest rates, instead the lender will charge a onetime fee, that will be repaid on an open term of 6 to 9 months as a small daily percentage from credit card transactions, a cash advance goes with the flow of your business, as you only payback when you sell in credit card transactions, you will never pay a late payment fee.

SBA Loans

Explanation: The Small Business Administration is an independent agency of the federal government. Its mission is to help people start, build and grow businesses. The SBA does not actually supply the loan; lenders are responsible for that part. But the SBA guarantees between 50 to 85 percent of the loan, making the lender less wary of lending to riskier borrowers. The SBA does this by backing and securing loans that are given by banks.

Requirements/Documentation: Applicants of SBA loans will be required to provide a business profile, loan request, collateral, business financial statements and personal financial statements.

Pros: SBA can back loans of up to $2million dollars. Start up businesses can also take advantage of SBA loans if they meet the requirements, provide the proper documentation and present a sound business plan.

Cons: Borrowers are at the SBA’s discretion when it comes to getting a loan. They have to be able to persuade them that the loan will be put to good use, and they must outline exactly how the loan will be used. Also, as bank lending practices tighten, SBA loans are also becoming harder to receive.

Business Line of Credit

Explanation: A business line of credit is like a credit card for one’s business. A business line of credit offers revolving credit with lines that typically range from $10,000 to $100,000.

Requirements/Documentation: Many different banks offer business lines of credit. They may offer lines of up to $25,000, or lines of $25,000 and over. Requirements may vary depending on the lender that you are working with.

Pros: You have accessible cash on hand anytime you want. Also, many lenders do not require borrowers to have collateral to receive a business line of credit.

Cons: Like a personal credit card, you must pay interest on the outstanding monthly balance.

Business Cash Advance

Explanation: A business cash advance is a purchase of a business’s future credit card receivables. Borrowers receive an upfront lump sum and in return, a small percentage from their business’s future credit card sales is deducted and used to repay the advance.

Requirements/Documentation: Most business cash advance lenders require that the borrower has a business that has been in operation for at least four months, and that the business processes a minimum of $2,500 per month in credit card sales. Borrowers must provide lenders with at least the four most recent months of their business’s credit card statements.

Pros: Borrowers do not need to have collateral to receive a business cash advance. There is no interest on the advance, and there are no fixed monthly payments. There are also no penalties for repaying the advance slower or faster than expected. Also, there are no restrictions on how your business cash advance can be used.

Cons: Business cash advances can not be used to fund start-ups, as the borrower must have owned his/her business for at least four months to be eligible to receive the advance. Also, only merchant businesses that process credit card transactions are eligible to receive business cash advances, as the payments are taken as a small percentage from a business’s daily credit card sales.

How do I get a business loan if I don’t have the best credit score? This is a question that resides in the heads of various small business owners. There is an abundance of small business owners who need money to finance business endeavors, but have not been able to obtain this money because their credit scores are not as high as lenders would like.

Even though it may seem like one has to have impeccable credit to receive a loan, there is still hope for business owners with not-so-great credit who need business funds. So what is it that these small business owners can do to receive business financing while in the midst of improving their credit scores? It is called a business cash advance and it is a source of business financing that relies on the business’s cash flow for loan repayment.

Instead of looking at your personal credit history, and evaluating your credit score, business cash advance lenders look at your business’s history, reviewing your business’s most recent credit card statements, and finding your business’s average monthly credit card sales.

Business cash advances can be used for whatever your business may need, without restrictions. And unlike traditional business loans, a potential borrower does not need to thoroughly explain to a lender how the loan will be used.

The steps and the time between applying for your business cash advance and having your bank account funded are very few. First, an applicant must complete a short application and provide lenders with documentation of their business’s most recent months’ credit card sales. Then, a funding specialist will review the application and documentation, and determine how much money can be advanced. Once the applicant agrees to accept the deal, the account of his/her choice can be funded in as little as ten business days.

Now, the question is no longer, “Can I get a business loan if my credit isn’t great?” but, “How soon can I get my business cash advance?” Requirements do not need to come in between you and business financing, and the sooner you contact a lender and complete an application, the sooner you can have the money your business needs.

Based on bank lending practices, one might be misled to believe that people with a bad credit history are not capable of running successful businesses, unlikely to repay business loans, and overall, risky borrowers. But the truth of the matter is; having bad credit does not make a person incapable of running a profiting business.

There are many reasons why a person might have a low credit score that may have no relation to their money management skills. These include having obscene amounts of student loans to repay after graduating before getting a job that can support those payments, and getting caught in the lure of credit cards as a young adult and having to pay for it later. But in the end, these mistakes can serve as a learning experience, teaching a person to make wiser financial decisions in the future and making them better equipped to handle financial problems that are presented within their business.

The question remains: Is there hope for business owners who have poor personal credit histories? Is there a way to get a bad credit business loan?

The answer is yes. Through a business cash advance, a business owner can get a loan for his/her business even if he/she has bad credit. This is because business cash advance lenders take the strain of repayment off of the borrower, making the business responsible for repaying a loan.

How does this work? A business cash advance is a purchase of a business’ future credit card sales. Business cash advance companies provide an up-front cash payment in exchange for a small percentage of the credit card sales that a business makes until the loan is completely paid off. Therefore, having bad credit is not a disqualifying factor when it comes to receiving a business cash advance.

The repayment of a business cash advance also has no affect on a borrower’s credit score. So the borrower does not have to worry about worsening his/her credit score when receiving a business cash advance.

Many Americans do not have the 700 point credit score that is usually required to receive a business loan, but that does not mean that their dreams of running a successful business should be shattered. Fortunately, the availability of business cash advances gives business owners with bad credit another option, making it possible for them to finance the development of their businesses.

Raising sufficient working capital is an essential requirement for any business start-up. Moreover running a small business often calls for the need of a financial boost at times of crisis. The business cash flow can be disrupted due to various unforeseen reasons. Payment of dues, purchase of new equipment or starting new business venture might cause additional disruption in cash flow particularly of a small business. There are plenty of options for choosing the right service to acquire this capital, and this process could be quite confusing. The mode of financing is an important element that determines the success of the organization and thus an exhaustive understanding of the available funding options is almost mandatory.

Business cash advance is one of the most popular modes of acquiring essential business finance. It is almost similar to a payday loan. However, payday loan requires an individual to provide proof of employment and salary whereas business cash advance is perfect for an entrepreneur to get funds when he lacks perfect credit or doesn’t have the ability to get funds by other means. The only requirement of business cash advance is that the business should accept credit transactions, i.e. it should allow it’s customers to pay with visa or master cards. It is just an advance and not a loan; hence every time the business receives a payment, a part of it is automatically forwarded to meet the repayment of advance.

Working capital loan, another great way of acquiring funds is the traditional and most commonly followed method by most small business. However, it is not as easy to get funded in this mode as compared to business cash advance. Working capital loan is difficult to qualify for when compared with business cash advance as an alternative source for working capital financing. The credit score of the borrower, the available collateral and various factors are carefully considered before acceptance of working capital loan. However, most small businesses would easily qualify for a business cash advance.

Getting a working capital loan involves a lot of paperwork and quite some time. However, it is not the same for business cash advance. Business cash advance is processed much faster and it involves relatively less paperwork, thus simplifying the process of working capital financing. Moreover a business cash advance does not have a fixed repayment schedule as the case is with working capital loan. The repayment is done from credit card sales receipts and the businesses generally do not feel the pinch. However in case of working capital loan, if the borrower fails to repay the working capital loan, it might not only affect his credit score but also poses a threat of losing his collateral. Irrespective of the business volume on a particular month the borrower will need to repay the working capital loan according to the pre determined fixed amount.

Considering all these, it could be well concluded that a business cash advance is much easier option for an entrepreneur to acquire working capital financing.