Your Guide to Alternative Business Funding

by / Tuesday, 09 June 2015 / Published in Merchant Cash Advance

If you’re thinking of starting a business, or are already a small business owner in need of funds to expand or stay profitable, one of the first things to consider is where the money will come from. Bank loans are acceptable for some business owners, but they often require collateral. If you have bad credit you might not be able to secure one. Being turned down for a loan can be a discouraging prospect, but there are other options available. Here’s what you need to know about alternative business financing.


Photo credit: mgbjay / Foter / CC BY-ND

What is a Merchant Cash Advance Program?

A merchant cash advance program involves a merchant borrowing a lump sum against future sales, usually paying back the money through a portion of each credit card transaction. Generally, they feature short repayment terms and small daily repayments as opposed to the monthly payments associated with traditional loans. Merchants agree upon a percentage of their sales to be paid at every transaction until the loan is repaid. Typically, merchant cash advance programs require no security in the form of equipment, homes, and inventory, making them a safe option for borrowing.

Advantages of a cash advance program include quick approval times and no required collateral or personal guarantees. This makes them ideal for business owners who have tried other financing methods and are looking for alternative ways to finance their businesses. Greater flexibility in repayments makes them an attractive option for business owners who experience ups and downs in sales and might not be able to make the fixed monthly payments required by bank loans.

Things to Consider

The first thing to determine when you secure an alternative small business loan is what the money will be used for so you know exactly how much to budget for. Common reasons business borrow money include: remodeling, expansion, loan repayments, new equipment, and promotional costs. Determining how much you need to spend and how much you can afford to borrow will ensure that you can make the most of your merchant cash advance.

How Does it Work?

Unlike a traditional business loan, a merchant cash advance does not require a business plan, personal guarantees, collateral, or a spotless credit history. Instead, it takes your present earnings into consideration, so you don’t have to worry about past credit problems. You simply agree upon an amount, sales percentage, and interest rate. Approval within 24 hours means you can get the money you need for your business much faster than with traditional loans. Another convenient feature is the refinancing option—once the advance is 70% repaid, you have the option to refinance for up to 200% of the original amount. Many merchants take advantage of this option rather than applying for another cash advance.

If you’re considering a merchant cash advance program to expand your small business, contact the professionals at Horizon Business Funding to discuss your options. Call (888)467-5509 today, or simply apply. With our easy application form, you can get funding for your business quickly and easily and start working toward your dreams today.

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