Entrepreneurship is an exciting journey that often comes with financial pressure. Running your small business with a favorable cash flow position is a lofty goal for many new business owners. Achieving that goal exemplifies a healthy company. Having cash on hand gives small business owners a sense of security in the event of unexpected expenses. It also allows you to prepare to expand your business, and reinvest in your growth and future success.
External factors play a significant role in managing the finances of your small business. Market disturbance, lead flow, and future payments can all put the financial position of your business at risk. For many entrepreneurs, having cash on hand can be the defining factor in securing the future growth of their company. Often, conventional banking institutions do not offer adequate financing access to small business owners. In addition, traditional banks may have a delayed response time and require an extensive application process, including extreme collateral requirements. Because of this, they are frequently not a viable option for business owners in need of immediate funding.
Small business owners are now turning to alternative lenders in lieu of traditional banking options. Alternative lenders have the ability to provide business owners with the capital they need, in a brief timeframe, to keep their businesses running.
What can alternative business funding be used for?
Many small business owners require some kind of extra financing throughout the life of their company. Alternative lenders often become the catalyst for business growth. Funding may be used for:
- Business Expansion
- Hiring New Employees
- Marketing, Advertising & Promotion
- Partner Buyout
- Working Capital
- New Equipment
What should I know about alternative funding choices?
Traditional bank loans are based on security and excellent credit. Because of these strict requirements, many small business owners turn to alternative lenders to make a significant investment in their active operations. Business Cash Advances (BCA) are provided to companies as an advance on the future growth of the business. This option is ideal for businesses with consistent sales that demonstrate future growth potential. A BCA is paid back through a credit card split, daily ACH withdrawal, or weekly ACH withdrawal and will extend until the balance of the advance is repaid in full. A BCA is not a loan, but an advance based on the future revenues or credit card sales of the business. A contract is created between the lender and the business detailing specific terms like the advance amount, rate, holdback percentage, term, and total payback amount. Alternative lenders are able to provide funds quickly by using a different set of underwriting guidelines than a traditional bank. BCA funders consider the history of daily receivables and credit card receipts, as well as previous payment history, instead of looking at your credit score and collateral.
What are the advantages of a Business Cash Advance?
- High Approval Rates: BCAs are available to businesses with a low credit score as well as businesses in high risk industries. You may qualify for a BCA as long as your business receivables align.
- No Collateral Required: A BCA is a sales transaction. Nothing is reported to credit companies, and the funder assumes all of the risk.
- Flexible Use of Funds: Traditional banks may restrict how you can use the funds they lend. A BCA allows you to use the funds in any way you see fit to support your business operations.
- Manageable Payback: Since a BCA is revenue based, you only have to pay back the advance in small, daily increments in relation to your volume of sales.
What information will I need to apply for alternative funding?
Acquiring funding through an alternative lender has become a simple and easy process. Unlike conventional banking institutions, alternative lenders often have an easy application process, with a quick turnaround time for funding. To begin, make sure you have the following documents at hand:
- Legal Business Name (DBA, LLC, Corporation)
- Business Tax ID Number
- Business Bank Account
- Business Phone Number
- Business Website
- Personal Credit Score Above 500
- Trade References
- Last 3 Business Bank Statements
- Active Secretary of State Listing
- Articles of Incorporation
- Tax Returns
- UCC Filings
- Information on any Judgements or Liens
Established businesses with a challenged credit history as well as businesses in high risk industries can benefit from a business cash advance. Small business owners looking for fast access to capital may find a BCA to be the most viable option. Approvals generally occur within 24 hours, and funding can be provided within 72 hours. A business cash advance can put the capital you need into your account right when you need it. Researching alternative lending options? Check out BizLender online or call 855-433-8641. BizLender has been offering lending solutions since 2013, and emphasizes working smarter, not harder, by using technology to fund small businesses in as little as 24 hours.