What is the Best Merchant Store Loan Alternative?
Every small business owner knows how difficult it is to obtain financing in the current economic climate. If you are in this position, you may have tried several banks without success, and be uncertain how to proceed with merchant store loan alternative. However, there are other potential sources of funding you can explore, depending on the type of business you run.
If your business is mainly concerned with supplying other businesses, who may not always pay on time, thus impeding your cash flow, one possible source of funding is asset-based lending, or factoring. The factoring company takes on your receivables or invoices, paying you a percentage up front and taking responsibility for collecting the payments. Another possibility is to approach the specialized companies which offer non-bank loans to small businesses. The repayments are not fixed amounts, but are based on a percentage of your monthly revenue, and in addition the company takes a small stake in your business.
Probably the best known merchant store loan alternative is the merchant cash advance. You can apply for one of these if you have a business merchant account, and the funds are provided as advances on future credit card sales. No collateral is required, and it does not show up on your credit report.
These advances can work out very expensive, so should not be used without careful thought. However, many businesses find the cost is outweighed by the benefits, the greatest one being that you only make repayments when you have money coming in. If you have a lean month, no payment is taken. In addition, if you go out of business before repaying the advance, the lender stands the loss.
During the current recession, the merchant cash advance has become the most popular avenue of funding for small businesses. The important thing is to weigh up the cost against the alternatives, and use the advances only for short-term funding. If used correctly, they can be an excellent way of overcoming a cash flow crisis, and keeping your business going until you can qualify for cheaper financing.
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Alternative to Normal Small Business Loans
If you are a new business and need more capital, you may have a harsh reality when the bank denies your loan even with semi-good credit. Banks and credit unions have made getting business loans harder than ever with more criteria needed in order to be approved.
This has left new business owners unable to continue with their small business loan dreams due to lack of cash. However, a merchant store loan alternative may be just what is needed to get the capital to continue business owner's dream.
A merchant advance is a loan that is easier to qualify for since it is not as strict about credit as it is how much the business currently makes and what the projected sales are. The loan is paid through future sales and whenever a credit card or debit card is run, the lender gets a percentage to help pay the loan off.
The interest is higher than a traditional small business loan, but since the loan payments are based on sales, it can be a better option, in many cases. Often the only thing standing in the way of a bank loan is a credit score, but with a merchant advance loan, this problem is removed.
While the interest may be higher on an alternative loan, for many small businesses, it is the best way to obtain the capital needed. A bank loan, while having less overall interest on the loan, is not flexible in the repayment. Flexibility is what small businesses need and why this type of loan has gained in popularity.
If you are just getting started in your business and have been denied a small business loan, do not feel bad, the majority are not approved. The almost impossibility of obtaining a traditional small business loan has left the door wide open for alternative solutions such as a merchant cash advance loan.
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The Advantages of a Merchant Cash Advance
Often, growing companies need a cash injection to fund their expansion, or to have some extra capital to work with. Regrettably, for many companies, it is impossible to access the cash for all their business purposes. Normal funding methods involve a great deal of admin before your request will even be looked at. Assessing your application can take even longer. Ultimately, there is a good chance that your request for financial assistance will be turned down for unclear, bureaucratic reasons.
Fortunately, a good substitute method exists for acquiring business funds. Merchant cash advance allows you to get hold of anything from $2500-$250000, based on your company's profile. If your business receives more than $5000 worth of credit card payments from clients on a monthly basis, then you might be eligible to obtain 100-200% of the monthly value of your credit card transactions as an unsecured business loan. Normally, a small percentage (of approximately 10-25%) of your company's credit card takings each day is used to pay back the merchant cash advance.
Only basic documentation is required to submit your funding application. There is no need to be worried if you have a bad credit rating that restricts you from getting a loan from other sources to fund your business goals. You might be able to receive up to $250000 in as quickly as two days, and be allowed to access that cash in less than three days.
This type of unsecured business loan has meant that numerous companies, both big and small, have been able to get the funds they need to enhance and grow their businesses. Neither application charges nor personal collateral are a pre requisite to get loan approval. Unlike repaying a standard loan, you are not required to make any fixed repayments that place extra pressure on you.
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Possible Benefits of Merchant Cash Advance
If you have a new business and struggling with cash flow as many start-up companies do, you may have considered a bank loan. Traditional loans tend to take a long time to process and many new business owners would not be approved due to past credit problems.
An alternative to bank loans is a merchant cash advance, which can greatly help new businesses that need more money to put into the business. This type of advance works by the lender giving you a lump sum amount with an agreement that the loan is paid back via a percentage of credit card and debit card purchases made in the future.
Many retail establishments use the merchant cash advance option. It is important to realize that these loans do carry a higher interest rate than a traditional bank loan. However, since it is paid back from future transactions, it often makes it easier for a business to pay.
The payments and percentage paid to the lender changes each month as the sales of the business changes. If one month sales are $5000 and the next month sales gross $10,000, the higher sales month will have a higher loan payment.
Because the cash advance offers such flexibility, it makes it much more convenient for some businesses. A bank loan is a set payment that doesn't fluctuate with the business as a cash advance loan does. This is another reason it us typically quite an attractive option for many newer businesses.
Another important benefit is the loan is processed faster than a bank loan. This means that access to the cash is accessible sooner.
The amount of the loan is normally based on the sales the business has on a monthly basis. Once the lender has access to this information, they will make a determination on the amount of cash you are eligible to borrow.
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The Benefits of a Merchant Cash Advance
Frequently, expanding businesses require an extra injection of cash to finance their growth, or for extra working capital. Nonetheless, much of the time it is not possible to access the money for all these business requirements. Standard methods of funding involve a lot of paperwork before your application will even be considered. Processing your request can occupy even more time. In the end, there is a high probability that your funding request will be declined for dubious, technical reasons.
Happily, there is an excellent alternative available for obtaining business capital. Merchant cash advance is a straightforward concept that enables you to acquire funds ranging from $2500.00 to $250,000.00, depending on the profile of your business. If your company takes over $5000.00 in credit card payments from your customers every month, then you could reasonably expect to receive funds from 100% to 200% of your monthly credit card turnover in an unsecured loan for your company. Typically, a modest portion (of about 10% to 25%) of your credit card processing is used each day for repaying the merchant cash advance.
Merchant cash advance only require basic documents to process your application. You do not need to be concerned if your poor credit score is restricting you from receiving the funds you require to finance your business objectives. You could be approved for as much as $250,000.00 in as quick a time as 48 hours, and be able to access that money in under seventy two hours.
These unsecured business loans have helped several large and small companies obtain the funding they require to improve or expand their business. No personal collateral or application charges are necessary to be approved for a loan. In contrast to normal loan repayments, you do not need to make fixed payments which place additional burdens on you.
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Equipment Leasing : Should You Purchase or Lease Your Company Equipment?
Every business uses equipment of some kind in their operations. From computers and copiers to expensive vehicles, equipment is essential to getting most jobs done.
The more important specialized equipment is to your business, the more important the issue of buying or choosing equipment leasing. There are many factors that go into deciding which is more important to your operations. Each of the following factors will have more importance based on the degree your company operations relies on specialized equipment.
Credit and Cash
The first issue for any business is managing its available cash and credit. This is especially the case for expanding businesses. Purchasing equipment can consume cash and credit lines. Depending on the total amount to be invested in equipment leasing, this can be one of the most important issues to consider. In most cases, leases require less of a company's cash flow and credit resources than purchases.
Efficiency and Maintenance
When equipment is leased, it is usually for a specified number of months or years. At the end of the lease, the equipment is returned and, if desired, replaced with newer equipment. New equipment can mean improvements in efficiency and reliability. When equipment is purchased, it generally means it is used for a number of years before replacing it. This can result in increased costs in maintenance. Older equipment can result in substantial down time. Often, the equipment a company uses is impacted by changes in technology. In such cases, a lease can bring several advantages over purchased equipment.
An advantage of purchased equipment is the depreciation that can be claimed. Depending on the specific case and tax laws in effect, the tax savings can be significant. On the other hand, only part of the monthly payment on equipment purchase financing can be deducted. In most case, lease payments are totally deductible.
Each business must explore the relative merits of purchase versus lease for their own situation. In most cases, the larger the expenditure on equipment, the more practical is the equipment leasing option.
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Use Equipment Leasing to Conserve Cash
Every business must generate a profit to survive. Even profitable companies must, however, be concerned about cash as much as profits. It is a simply reality of business that cash is the fuel that keeps companies running. If you are managing a growing business, cash is even more of a concern. This is because growth in a business consumes cash.
Protecting Your Cash
With the importance of cash to operations, an effective manager will use a number of methods to conserve cash. One of the most effective cash management strategies includes using equipment leasing. The purchase of equipment can require cash to be sunk into down payments and high monthly payments. If adequate credit is not available, the equipment can require outright purchase. This takes even more cash out of the company.
The Power of Equipment Leasing
An effective and cash conserving approach is to avoid capital expenditures on equipment. Use of equipment leasing can make that possible. When equipment is leased, it is often its own collateral and doesn't impact a company's credit line. In fact, prudent use of leasing can improve the credit score of a business. Additionally, leases are designed to avoid large upfront cash payments. Monthly payments on leases are usually lower than purchases, adding more cash savings.
When equipment leasing is utilized, the leasing company will often provide favorable terms for upgrading and replacing equipment on lease. This can make your business more efficient and avoid the maintenance of older company owned equipment.
The benefits of leasing can be supported by the fact that even large corporations are frequent users of leasing as a financing alternative. Many of the vehicles and much of the machinery you see used by the largest companies are leased from a third party.
If your company plans a large investment in equipment, leasing may well be a better alternative to consider.
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The Benefits of Equipment Leasing
For many companies, expensive equipment is at the heart of their business. Vehicles, machinery and specialty equipment can represent huge demands on a company's credit and cash flow.
Challenges of Owning Equipment
The expense of equipment often means delays in replacement. These delays can cause less efficient operations. Increased maintenance costs and down time are often major issues. Even safety issues can be created with older equipment.
Advantages of Equipment Leasing
There are many advantages to both small and large companies with equipment leasing. These include:
• Conserves cash and credit. Leases require minimal down payments and usually lower monthly payments. Use of leases is generally separate from a company's bank lines and can actually improve credit ratings.
• New equipment. Leases are normally provided on new or nearly new equipment. This saves on maintenance costs and down time.
• Efficient equipment. Technology is changing everything. By having new equipment rather than older company owned equipment, a business can take advantage of the latest innovations and, where relevant, fuel savings.
• Tax savings. Depending on a number of factors, a company can expense the total cost of lease payments. This can mean substantial tax savings.
• Competitive position. Customers respond to companies that have the best equipment for the job. It can save money and time and can be the deciding factor in getting the job.
Equipment leasing is a major business serving the Fortune 500 companies as well as the smallest mom and pop. The leasing companies have excellent relationships with the manufacturers of the equipment in which they specialize. They closely monitor the credit, resale and used equipment markets. This means they are in a position to maximize the financial terms and equipment options they can offer on the equipment they lease. This time saving process can be of a significant value to the overworked businessman.
Equipment leasing is an excellent option for most businesses, large and small.
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Options for Business Financial Services
Trying to raise capital for a business can be stressful especially when the banks have become very stringent on loan qualifications. Many new and small companies alike look for business financial services that are considered as non-traditional approaches to funding. There are lending options available that may not be through a bank but it has become necessary to seek out other means of gaining capital while growing a business.
A merchant cash advance is one such service as it offers a way for businesses to get a loan based on what their current sales are now and projections for the future. This loan is more concerned with sales than it is with an owner's credit score. Because of this It made a huge hit with small businesses that need capital now and do not have the credit score the banks are looking for. Since these loans are much faster than a bank loan, business owners get quicker access with Business Financial Services.
Typically with a cash advance loan, the lender wants to see that the business owner has been making a minimum of $5,000 in credit card sales each month. The amount of the loan depends on the amount of sales for the past several months.
The stricter banks become on the loans, the more the merchant cash advance loan industry grows. Many times a small business without a loan will not be able to survive, they need the capital but banks turn them away. This leaves a need for these small businesses to remain in business. If small businesses begin closing, the unemployment will rise since so many people are employed by small companies in America.
While no one knows how long it will take for banks to loosen up on their lending practices, small businesses simply cannot wait. They have been forced to look for other business financial services in order to keep the business afloat. Right now, this is definitely the answer since the cash advance repayment is very flexible.
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An Overview of Business Financial Services
All banks and financial institutions have to be able to provide effective, consistent and accurate banking services. Often, a well thought out banking service can substantially assist firms with their growth. Nowadays, due to intense competition, the majority of firms can’t undergo the business disruption, or spend the time and money on costly and complicated processes. This is how banks can make a real difference. Good banks use their expertise to offer suitable business financial services, which significantly lower costs and reduce potential risks for firms.
Business Financial Services
To offer the most benefits for business, a good bank will work diligently to give the best possible solutions for streamlining business transactions. Reputable banks will provide lending services, transaction accounts, credit cards, savings accounts and other proven and flexible payment options. Several global banks provide an array of business financial services geared towards aspiring and established entrepreneurs, to help them grow their business seamlessly. Also, banks give their customers advice about managing cash flow and fund flow. Moreover, several banks now combine their different services to pass on extra value to their customers.
One instance of the help that banks can give to firms is the option of merging a transaction account with a loan account. This allows businesses to access their money in multiple ways. The majority of banks will provide an internet banking facility for smooth business operation, and they will charge a variable interest rate with no monthly payments.
Banks offer vital business financial services that enable firms to reach their goals. Normally, along with this, a bank will provide effective payment solutions so that businesses can sustain an uninterrupted operation. Regardless of whether you are a huge IT corporation, a shop keeper or an individual trader, banks and financial institutions provide a great selection of payment facilities to suit specific requirements.