If you own a small business setup, you might find yourself landing in the domain of business loans for several reasons.
Perhaps you just started a business and require funds to purchase equipment and inventory. Maybe you have had a rough patch in your business and looking for funding options to pay your employees. In the best scenario, your business is blooming and you want to expand it, so you need working capital. Whatever is your reason, finding the right funding source is imperative.
Here are some tips you can use to find the best lender or funding source for your business.
Consider the Category of Lenders
Choosing the right funding option requires you to go through different categories of lenders. You can approach big banks, small banks, and non-bank lender to request funds.
However, funding sources like big banks typically have lengthy loan proceedings and may take longer time to approve the loans. They may have high interest rates. In addition, small businesses struggle to get their loan approved due to their low credit scores.
Non-bank lenders, in this regard make a viable funding source for the newly established businesses. Merchant cash advance, for instance is a funding source that provides instant cash without and hectic or stressful procedure.
Identify the Type of Funding Source Your Business Needs
This is, without a doubt the most important tip you must consider when finding working capital for your business needs. Here is a list of popular financing options businesses can avail according to their needs.
Business owners can visit Crowdfunding sites to promote their business ideas. They may find people on these platforms who are interested to invest in their business.
· Invoice Financing
Invoice financing is another funding source in which businesses can sell their paid invoices to the factoring companies and get the funds needed.
· Online Loans
Online loans for the businesses are relatively a new funding source and can provide faster approvals as compared to traditional bank loans. Businesses can apply online for the funds. Lenders review the application and can approve or deny the funds within minutes.
· Alternative Financing
As mentioned above, Non-bank lending funding sources includes merchant cash advance. This non-bank lending option is not only easy-to-qualify but also allows businesses to repay as a percentage of their credit card sales.
In general, this alternative funding solution is an advance on future receivables from the merchant or business owner and can give 30 to 40 percent of applied funds. There is no denying that short-term payment solution like MCA are very helpful for small businesses and enterprises, as they need quick funding.
In short, if you are a borrower and have less credit rating and could not secure finance from commercial banks, merchant cash advance is the go to solution.
Overall, choosing the right funding source can be daunting task if you do not have sufficient knowledge about finance alternatives in the loan market. It is always better to consult an expert like Alternative Funding especially when you are opting for the non-bank lending solution.