Easy may not be a word that normally used to define the process of getting a traditional small business loan. Usually, it takes couple of months of research and application for a small business to connect with the appropriate lender.
Many people wonder whether or not getting a business loan versus a personal loan is simple to fund their corporation. But, simple and easy business loans are available in the market. Many non-traditional funding options exist for small businesses that immediately need cash and don’t meet the qualifications of traditional lenders. Here is an overview of 4 quick funding sources for small business owners.
- Merchant Cash Advance
A merchant cash advance (MCA) provides your business a lump sum of cash in exchange for a percentage of its future credit card sales. Mostly, in cash advance setting, you are selling your future sales to a cash advance firm at a discount.
The cash advance usually draws its percentage from your daily credit card sales until the loan is fully paid back. A merchant cash advance is a superb funding option for businesses with seasonal ebbs and flows, as the repayment amount varies equivalently with your sales.
Cash advance can be funded in one or two days after the lender verifies some things from checking files like tax returns and previous monthly credit card sales. Credit is not a requirement for an MCA, which makes it tempting as a startup business loan. Relatively, the interest rates on an MCA can be quite high; however this type of funding can help a business in financial trouble.
- Accounts Receivable Financing
Accounts receivable financing companies purchase your outstanding invoices at a discount. Your small business will get a single payment and the accounts receivable firm will collect on your invoices to repay the loan.
Obviously, this sort of funding demands that your business has invoices to collect upon. It can be useful when you need cash without any delay and don’t have enough time to wait out the repayment terms on the invoice.
For instance, your small business reports a gap in cash flow and needs to cover the payroll; invoice factoring can be an excellent funding alternative. Comparing with cash advance, invoice factoring is less perilous, because it involves cash you have already made as opposed to projected sales. However invoice factoring entails substantial costs as compared to cash advances.
- Peer-To-Peer Lending
Peer-to-peer lending matches borrowers and lenders online. Many people and organizations participate in peer-to-peer lending as a way to make investments that yields better returns as compared to buying investment products from traditional sources.
Due to the fact that the whole lending process is dealt online, the peer-to-peer lending systems can provide borrowers lower interest rates as compared to many other financing alternatives.
Based on their credit score and business history, small businesses hoping to borrow are rated so the potential lenders can examine their risk. The uncertain the funding, the more problematic it will be for the small business borrowers to acquire satisfactory terms and rates. Peer-to-peer lending process is super-fast, so it’s a quick and easy small business funding source.
- Online Lending
Online lenders provide a market where investors and borrowers can connect easily. After providing some easy application details, online lenders present a small business with several lending options. Terms and interest rates will vary based on the lender and your business credit rating.
Usually, online lenders offer less favorable rates and terms as compared to traditional lenders. However, for many small businesses that don’t make the grade for a traditional funding or businesses that need cash immediately, online lending can be a rescuer and also can be funded in a day or two.