The economic climate in America is very different from the one that existed a decade ago. The deep recession of 2008 and the failure of several large banks caused the government to change the requirements for how a business can qualify for a bank loan. Although banks have money available to lend and interest rates are low, most small businesses cannot qualify for traditional loans for one of the following reasons:
- Bad or non-existent credit rating
- No collateral or assets with which to secure the loan
- Need less than $200,000
- Haven't been in business long enough
Alternative Funding Sources Fill the Gap
Just because a small business doesn't qualify for a traditional bank loan doesn't mean they don't still need cash to make payroll, purchase or replace equipment, or open a new or bigger location. Sometimes businesses need available cash just to get through the lean times and stay afloat.
Business loan alternatives can provide needed cash without many of the restrictions bank loans place on business owners. Some business owners prefer alternative funding to bank loans even when that choice is there for them. More and more businesses are starting to see some decided advantages to business cash advances when compared to bank loans.
Advantage #1: Turnaround Time
Business cash advances can be disbursed in as little as 48 hours, which can sometimes mean the difference between continuing to operate and having to close a store or retail location indefinitely because of a lack of funds.
Advantage #2: Automatic Payments
Business cash advances get repaid by owners allowing the cash advance company to take a percentage of future sales through automatic payments on a daily basis. With automatic payments, you can never forget to pay. It's one less thing for a busy owner to have to think about.
Advantage #3: Variable Repayment Amounts
Repayment of business cash advances is made as a percentage of daily credit card sales, which is more advantageous than a fixed payment would be. Because it is a percentage, payment amounts go down when sales go down, and they go up when sales go up. In this way the business won't be repaying more than they can afford during their slower times.
Advantage #4: Short Repayment Terms
Instead of being in debt for many years, business cash advances usually get paid off in 3 to 12 months. These short repayment periods allow business owners to move on with their plans and goals quickly rather than being saddled with debt over a long period of time. Although the quick cash comes with fees, paying even a low interest rate over a period of many years can mean that a traditional loan costs more overall.
Advantage #5: Flexibility to Spend Cash as Needed
Many traditional loans come with a stipulation that money must be spent on stated purposes, that is, on what you said you needed the money for when you applied. Business cash advances give owners complete control over what to spend the money on, which makes them a more versatile funding source.
Quikstone Capital Solutions matches businesses with the cash they need to succeed.
Quikstone Capital Solutions provides business owners with funding to meet their business needs now. The application process takes just minutes and the money can be in your hands in days.
