financing4prosperity

re you a small-business owner, looking for the capital needed to promote business growth? If so, you may be considering your business funding options and the difference between them. There are several traditional and non-traditional or alternative lending methods available. Deciding what business lending option is right for your business can make all the difference. So, before you act, you may want to consider your options.

Traditional Business Loans

A traditional business loan or a commercial loan is a debt-based funding agreement between a business entity and a financial institution such as a bank or credit union. It is typically used to fund capital expenditures or operational expenses that your business may not be able to afford.financing4prosperity

How a Business Loan Works

Business loans are granted in a variety of industries to help with short-term funding needs that can facilitate the operating process of a business. The funds are typically used for operational costs and the purchasing of equipment, but may also be used to meet more basic needs, like payroll or purchasing supplies or inventory.financing4prosperity

Securing a Business Loan

Like any other traditional loan from a bank or credit union, the creditworthiness of an applicant is a key factor, as well as the collateral a business owner has to secure the loan. In most instances, the business that is applying for a loan will be required to present documentation in the form of balance sheets and other similar documents. This will help to provide proof that the business in question has a favorable and consistent cash flow to allow repayment of the loan according to the terms set forth. The business in question is you.financing4prosperity

Business Loan Approval

If you met the stringent requirements for approval, you will be expected to pay an interest rate that falls within the federal guidelines at the time the loan is issued. Traditional lenders, providing commercial loans often require monthly financial statements throughout the life of the loan. You may even be required to insure any larger items purchased with the funds you receive.financing4prosperity

Business Loan Denial

The problem with this type of loan, for many business owners, are the upfront costs that are incurred, as well as the credit history that is required for approval. Without the collateral and good/excellent credit score that is expected, business owners, like you, are getting denied funding. Because of this, smaller businesses, are relying on other alternative lending products, such as merchant cash advances.financing4prosperity

Merchant Cash Advances

In the past, a merchant cash advance was typically used in businesses that primarily relied on revenue from credit and debit card sales. But, merchant cash advances have evolved. They are now available to other businesses as well. Whether or not your business relies heavily on credit card or debit card sales, does not matter! You still have access to the funds a merchant cash advance can offer. You can also get an upfront sum of cash in exchange for a percentage of your future sales.financing4prosperity

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