Posted on September - 01 - 2010
What To Do When The Bank Says No
Loan decline rates for small businesses continue at close to the ninety percent level. Small businesses have been challenged by the slow economy. Business owners have continued to invest personal funds into their businesses, getting home equity lines, refinancing mortgages, selling unproductive assets, and tapping into credit cards.
Such actions have resulted in making small business owners even more of a risk for banks and have contributed to the high rate of turn-downs for bank loans. Owners with maxed-out credit lines and highly collateralized property are not attractive candidates for the banks.
Survey Says…
The high rate of bank denials has driven small business owners to look for new sources of funding. A recent online survey of 276 small business owners indicated that 87 percent needed a predictable and readily available source of capital. Consistently, business owners felt that funding decisions should be made on the strength of a businesses’ cash flow and not the ability to collateralize a loan.
Merchant Cash Advance Provides Funding
The survey results reinforce the concept of a merchant cash advance; cash advance decisions are made primarily on the strength of business’ credit card receipts. Factors like high personal credit scores for the owner are not required, and funds are readily available.
Funds Are Available Quickly
When businesses with strong credit card sales find themselves short on cash, they can get a cash advance on future credit card receipts with a merchant cash advance. A cash advance is often a good solution because:
- Repayment is made from credit card receipts, so the payment will go up and down as sales go up and down
- There is no fixed repayment term
- No collateral is needed
In order to qualify, a business owner needs:
- $2,500 minimum in credit card sales per month
- 4 months as the current business owner
- Have a FICO score of at least 500 (better credit = more funds and lower rates)
Merchant Cash Advance Gets High Rating
Business owners who have used a merchant cash advance found that it was easy to use, and generally recommend it to other business owners. The owner of a B & B in Texas has this to say:
“The cash advance allowed my company to expand and grow by opening another location. The payback is truly almost transparent since it is such a small percentage of our total gross revenue that is held back. I highly recommend other business owners to explore this innovative approach to securing working capital without the hassles and tedious paperwork involved with other more traditional lending sources. They get my highest rating of approval!”
A Viable Bank Loan Alternative
Business owners who are in need of a predictable and readily available source of funds who don’t want to tie up their collateral would be wise to investigate the benefits of a merchant cash advance.
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- Merchant Cash Advance For Specialty Retailers
- Quick Cash Advance for Carpet Cleaning Contractors
- The Impact Of Fraudulent Applications For SBA Loans
- Direct Merchant Credit Card Applications
- How “Small” Is Your Small Business?
