Bank loans are typically the preferred form of financing for businesses, but business cash advances actually offer some advantages to bank loans that business owners should consider. Please keep in mind that business cash advances are not classified as loans, but as a purchase of future sales; however, both types of financing provide a lump sum of cash to a business and can be used to fund immediate or ongoing needs.
Here are some significant reasons to consider a business cash advance as a way to help your business grow and thrive.
1. Business cash advances are much faster than bank loans.
It isn't uncommon for the application process of a bank loan to take weeks or even months from start to finish. Bank loans also ask for much more detailed financial information, some of which may be difficult to locate or remember. Business cash advances have a simpler application process and can disperse funds in one week or less for businesses that qualify.
Even businesses that aren't in dire need of funds can benefit from getting funds quickly. A faster process allows the business to move forward that much faster, which could accelerate growth and open up more opportunities.
2. Business cash advances are easier (and faster) to repay.
While bank loans for businesses may have repayment periods of 5 to 10 years or even longer, business cash advances are typically repaid in less than one year, leaving the business free and clear from debt. In addition to being repaid faster, business cash advances are repaid with automatic withdrawals based on a small percentage of daily sales. You don't even have to think about it, and when you have a bad sales day, you pay less so that you still have enough cash for the business to continue functioning.
3. Business cash advances consider the business's entire credit picture.
Bank loans determine how to extend funding based mainly on credit score, income, and whether a business has anything with which to secure the loan (collateral). A low business credit score or lack of a credit score will almost always cause your loan application to be rejected.
On the other hand, business cash advance providers look at a variety of factors to determine whether a business qualifies for a cash advance and how much cash an owner can get. Collateral is not required, and the sales history of the business counts for more than a credit score, so that poor credit will not automatically disqualify someone from getting an advance.
4. Business cash advances may cost less than bank loans.
Although business cash advances have fees that some consider to be high, the shorter repayment period may make the actual cost lower than a bank loan, which has interest that accrues on a daily, monthly or yearly basis until the loan is repaid. Bankrate's loan calculator can give you an idea of the total interest you will pay with a bank loan, so that you can make a fair comparison.
5. Business cash advances keep you in control of your business's finances.
Bank loans often require you to disclose how you will spend the money you get - and they hold you to it. If you spend the money differently and the bank finds out, they can call the loan. Business cash advance providers don't ask how the money will be spent - they trust business owners to make the best decisions about how to spend the money, and give them the freedom to respond if conditions change suddenly.
A merchant cash advance from Quikstone Capital Solutions is abusiness loan alternative that can help your business thrive and prosper. Apply now to Quikstone Capital Solutions to see how a your business can benefit.
