It is strange to note that, over 50% of  Small Business Loans applied by the entrepreneurs’ to the Banks are rejected for some reasons, where as the Federal government has done it job to help the small business enterprises. More than 30 billion dollars have been sanctioned to banks to provide loans to small business as and when they need it and apply for it.

The banks have not been helpful, instead they utilized the money to clear there own TARP. Banks used over 26 billion dollars to clear their obligations and only about 4 billion dollars were actually given as small business loans to the entrepreneurs. A survey conducted by Pepperdine University to find out the exact amount given as loan to small business enterprises, revealed that more than 60 percent application for loans had been turned down, which is a very high rate of rejections.

Small Business Enterprises seeking loans urgently required to uplift there businesses, to buy new equipments or for expansion of space etc are finding themselves in deep waters as far as finances are concerned. They find themselves no where to go.

Financial companies/lenders such as those who offer Merchant Cash Advance or Merchant Capital Advance were the only alternatives for the borrowers and small business enterprises; initially they found these loans high in interest rates, however recently they have reduced their interest rates to a reasonable. Merchant Cash Advances or Merchant Capital Advances are viable alternatives to the banks.

Merchant Cash Advance is a loan on “Future Sales”. Credit Cards Receipts are taken as a source for payment of the loan. The lenders control all payments to the business made through credit cards, a percentage of these sales is adjusted towards the repayments of the loan, and in some cases ACH network is also used.

When the banks are not cooperating to give much needed loan to the small business enterprises, than what alternative they have? They are   obliged to look for alternative means available in the market, to look for other sources. Merchant Cash Advance and Merchant Capital Advance are the means available to them to get funds they need for their business. Although the rates are comparatively high when compared with those of banks, the payback system based on percentage of credit card receipts is a major advantage for the borrower. The banks not willing to provide loan to the small businesses are unreliable.