SBA Loans Vs. A Cash Advance

Operating a business in any climate is tough, especially in an economy that still hasn’t fully recovered from the collapse a few years back. Customers are pinching their pennies. Forms of advertising are rising in cost, along with rent/mortgage, important utilities, necessary insurance, and a slew of other increasing costs that are directly affecting small business owners.

When the proverbial chips are down and businesspeople need some financial wiggle room, there are two main options typically explored: SBA loans and merchant cash advances. So, of the two, which is the better option for your business? Let’s have a closer look at what each option entails, and how you can benefit as a small business owner.

The Makeup of SBA Loans

The Small Business Administration (SBA) has been backing bank loans for over 50 years. This government agency was constructed with the sole purpose of supporting small businesses. However, getting a loan from the SBA doesn’t mean you deal directly with government. Like all things government, there’s some red tape to cut through. The SBA backs loans that are given out by banks, credit lenders and other qualified partners. Since 2008, regulations put in place make it much easier for small businesses to receive a loan, but it’s still a lengthy process.

Even with the regulations, getting what you need is another story entirely. Unfortunately, the SBA regulators are going to dictate the terms of your loan if you don’t have excellent credit, and this means you’re essentially accepting a shark loan unless your credit score is up to snuff.

Here are some points to be aware of:

• You will need collateral for an SBA loan

• SBA loans may take around six months to go through

• A great credit score is needed for ample capital

• Guarantees are required from all business parties who hold a 20% stake or higher

• Your business will be looked into thoroughly

The Makeup of Merchant Cash Advances

A merchant cash advance is drastically different from an SBA loan. Though don’t make the mistake a lot of people make in assuming it’s more akin to a high-interest loan. It’s very different. In essence, a merchant cash advance is a way to receive a lump sum payment in exchange for percentage points of future credit/debit income. In other words, you receive your loan on the promise that you’ll repay the money by giving up a fraction of your future sales.

Instead of being on the hook for a high-interest bank loan that may ruin your credit and cripple your business, a merchant cash advance can be absorbed easily and won’t upset the balance. The loan you’re given is most likely going to prop your business up. Once you’re up and running smoothly, the percentage is paid to the lender until the terms are met.

One of the premier lenders helping small businesses with their financial needs is the Advanced Funds Network. Providing great terms, huge lump sum payments, and allowing businesses to retain much more control, AFN is one of the most trusted names in cash advances.

Here are a few points to keep in mind for cash advances from AFN. Listed below are some of the points of qualification and overall benefits of AFN for small businesses to focus on:

• If your business does at least $2,500/month in CC sales, you qualify

• $10,000 in gross monthly sales volume qualifies

• Proof of your monthly income is needed

• You get much more control over the sum and the terms

• Bankruptcy doesn’t work against you

• Bad credit doesn't work against you

• You’re not indebted to big lenders

• You can receive funding in under 48 hours

• Repayment starts at only 1% per month

Which Loan Type is Best For Your Business?

From the information provided, most businesspeople would agree that a cash advance is an easier option. Not only are you approved quicker for the loan, but you get to control more of the terms and you won’t be on the hook for insane varying interest rates. You can easily control the repayment by doing what you got in business to do in the first place: By profiting.

There are many lenders out there offering cash advances, but the Advance Funds Network provides the type of terms that businesspeople are looking for. With AFN, you will be approved for a lump sum payment quickly and will get to work directly with the company to set up the terms and conditions.

You also get to maintain your business’s privacy and integrity. Other than providing proof that your business earns X amount in sales, AFN won’t pry into your history like government and big banks and won’t probe around in your business. Best of all, you’re not putting other shareholders at risk with a cash advance. So you can receive a loan for your business and it won’t reflect negatively on anyone else.

There are many roads to take when you need money, but many of them are hazardous dead ends. If you want more control and gentler terms, a cash advance from AFN is the way to go.