A business cash advance can be a useful tool for business owners of any size when used correctly. It can be of particular use for businesses that have a shaky history or are expanding and reinventing themselves. Rather than undertake the long drawn out process of apply for a bank loan, a business can get access to the funds it needs in as little as 48 hours in some cases. This way a company can take care of what it needs to quickly and efficiently.
A business cash advance operates on the same basic principles as personal cash advance allowing the borrower to have instant access to a lump sum of money by entering into a contract to repay the initial amount plus interest. Unlike a traditional bank loan though, a business advance isn’t based on credit score and past performance. Credit scores can be affected negatively for a wide range of reasons, many of them beyond an individual’s control. A low credit score is not an accurate depiction of a business and doesn’t take into account all the potential variables. Many banks will turn away business owners with below average or even average credit scores or only offer a small fraction of the money originally sought. This makes a business cash advance the perfect alternative for those in need of funding but have a less than perfect credit score.
A traditional business bank loan usually requires several years of past financial statements as well. Simply finding the bank requested documents can be a huge hassle. Often they need exact and specific figures off certain forms. In addition to the hassle of finding past records, they are not necessarily a predictor of future performance. More often than not businesses seeking capital are planning on using it to make changes and improvements that will have a significant positive impact on future performance.
One of the largest obstacles that often prevent businesses from getting a bank loan is the issue of collateral. This is especially true for businesses that recently opened or don’t have many assets. If an owner doesn’t have the business assets to put up as collateral they may be forced to use personal assets as collateral. In the absence of either of those, many businesses try to use their inventory as collateral, which is rarely accepted. A business cash advance requires no collateral at all. Not only does it greatly simplify the process, but it alleviates a great deal of stress and worry about having assets on the line.
The repayment plan of a business cash advance is perhaps its greatest advantage over a traditional bank loan. A bank sets a monthly payment amount that has to be paid every month on time or the loan is technically in default. This payment plan has no room for changes in sales, unexpected expenses or any other variables that can affect the income of a business. A business advance uses an entirely different system. Rather than write a check for a fixed amount every month, the loan is repaid through a percentage of the credit card sales. In months where business has dropped off a bit, the payment can still be made without having to write a huge check. This payment model allows business to repay the loan in way that’s not detrimental to their bottom line and doesn’t create additional stress.
A business cash advance can be the perfect solution for any business in need of funding. When used responsibly the advance can provide the capital necessary to completely change a business and breathe new life into projects and dreams. For business who don’t want to be judged on their past, a business advance provides the perfect opportunity to look to the future.