By Josh Hart | uncategorized 0

You're a small business owner.  You work hard, take care of your customers and do everything the right way.  But sometimes that just is not enough.  You need working capital to buy inventory, expand your facilities, hire more employees or market for new customers.  But where can you turn.

            Traditionally banks supply the credit individuals and businesses need.  Interest rates are very low, and the loan can be paid back in manageable installments over periods of years.  It's a very attractive option IF your business qualifies.  But . . .

            The days when banks offered easy credit are over.  In response to the financial crisis of 2008, banks severely tightened credit.  Only top tier businesses qualify.  In other words, IBM or Apple can get loans; a small businessman who fixes IBM or Apple equipment usually cannot.  And if he does, that fixed monthly payment must be made regardless of whether the company had a good month or a bad month.  And even if the business fails, its owner usually remains liable because he or she signed a personal guarantee.

            A merchant cash advance is different.  Say, for example, you apply to a company like Bizlender.  Bizlender will shop many, many providers to find the best match for you.  If you agree, the advance provider will not make you a loan.  Instead, it purchases some of your future receipts.  In other words, the provider “takes the ride” with you.  If a business is good, Bizlender's client will collect its share of your receivables quickly.  But if business is slow, that is the risk the merchant cash advance provider takes.  Even if the company fails, absent fraud or other misconduct by the business owner this is exactly the risk the provider agreed to when making the advance.

            Merchant cash advances are more expensive than loans, but unlike traditional credit they are freely available in today's market.  Indeed, a company like Bizlender usually has multiple sources to match with any applicant.  Moreover, you are in and out of the product in a matter of months, as opposed to the years you might spend indebted to a bank.

            Best of all, Bizlender's merchant cash advance providers only collect what you can afford to deliver.  A merchant cash advance provider assumes the risk that, despite your best efforts, sales won't meet expectations.  Remember, a provider isn't loaning you money; the provider is only buying a percentage of your future sales.  It's in both Bizlender's and the provider's interest to ensure you continue to have sufficient cash flow to meet ALL of your obligations . . . not just repaying the advance. 

            If cost is the key consideration and you have outstanding credit, a bank loan may be the right option.  But for everyone else, applying for a merchant cash advance from Bizlender could be a far better choice.

Posted in uncategorized
Last edit: March 6, 2018


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