As the lending climate has continued to stagnate, small businesses that are hungry for capital are hunting for ways to find a merchant loan. Many normal sources of lending have become severely restrained while others have dried up completely.
Into the void has stepped a questionable cast of companies that claim to be an alternative for businesses that need working capital to survive going forward. The best option for any business is to apply for an SBA loan through a commercial lending institution. These types of loans have the best rates and terms available to small businesses. The downside to this equation is that it may take upwards of 4 months to be granted approval and sometimes the application can easily run over 180 pages.
However, there are other options for getting a merchant loan that mean you can get the funds much more quickly and are able to approve a wider variety of credit scenarios. This type of loan, known as Credit Card Receivable Financing. This business loan features the ability to work with a wide variety of credit situations as well as having no upfront fees or requirements to switch credit card payment processors. Additionally, interest rates are normally 50% cheaper than their nearest competitor, a merchant cash advance.
No matter where a business entrepreneur goes, they should be very careful about the number of signature, or personal credit loans that are online being advertised as a merchant loan. These sorts of loans are often just small, high rate, high fee loans that are based on a merchants personal credit, not the business. Additionally, such loans are typically not designed to meet the business repayment needs concerning cashflow and other considerations.
It is important to realize that before any business owner takes out a loan that they need to consider where it will place the business in the future. A loan that takes care of today’s pressing need may also be the loan that puts a company in a financially disastrous position in the near future. With this in mind, business owners need to carefully consider such a move, and take care to read the fine print.