Why Small Business Owners Still Need Merchant Cash Advances

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The Small Business Administration recently released data for its first quarter lending for 2010.  According to the SBA, in the first three months of 2010, the administration processed 16,558 loans for a total of $3.7 million dollars, which is more than double the loan amount and funding amount than the same period of last year.  However, other statistics, as pointed out by CNN Money’s Catherine Clifford, show that small business lending has not completely bounced back and small business owners still need alternative business funding options such as the merchant cash advance.

• SBA-backed loans represent only a small fraction of small business lending overall, but these loans are closely monitored as an indicator of banks’ willingness to lend to Main Street companies.
• Banks have been hesitant to lend to small businesses, unwilling to take on any risk during the downturn, while small businesses themselves have been holding off on taking on more debt.
• One third of small business owners do not feel confident that they can get access to the capital they need to grow, according to a survey from American Express OPEN Small Business Monitor released last week.
• Less than one in five small businesses are getting the capital they need to run their business from a bank loan, according to the survey from American Express.

(Source: CNN Money)

Small business owners who still don’t qualify for traditional bank loans or even SBA-backed loans may still qualify for up to $500,000 through a merchant cash advance.