Choosing a Bank or a Business Cash Advance
Finding a suitable bank to finance your business is very important and Inc.com offers some great tips on choosing a bank for your small business in their article “How to Choose the Right Bank for Your Small Business.” Below are some standout points extracted from the article to help you choose a bank for your business.
*(Tip: If you find that your credit score and/or personal financial history are making it impossible for you to receive traditional bank funding, don’t hesitate to move onto the next funding method.)
- Consider your business’s current and potential, future needs
- Develop a good relationship with your bank before you need funds
- Determine special programs and/or features that you would like
If you’re like a slew of other small business owners out there that can’t find a suitable bank to fund their businesses, simply because they don’t meet minimum bank loan requirements, there are other options and skipping the bank altogether could be a feasible solution. Choosing a business cash advance can make it possible for you to receive up to $500,000 in unsecured funds. The requirements are simple and you’ll be able to renew your account approximately every three to four months.
You Just Might Need a Merchant Cash Advance
News of tightened bank lending standards is abundant. The truth is, getting a bank business loan is hard and the fact that so many small business owners need them doesn’t make it any easier. If you don’t believe us, take it from the slew of journalists who write on the topic every day. Take a look at the following quotes from various media outlets regarding bank lending, just in the past few months. You might be surprised.
1. Entrepreneur – Karin Price Mueller
“Money might be available thanks to stimulus spending, but that doesn’t mean it’s easy to get. The [banks] have tightened their lending policies, and it is more difficult for an entrepreneur to get financing,” says Velda Eugenias, a certified financial planner with Eugenias Advisory Group in Gadsden, Ala. “It is causing the small-business owner to have to get creative with finding sources of capital.”
2. AllBusiness.com – Susan Konig
“If you’re looking to get financing for your small business in today’s economy, you may have noticed it’s not easy. Despite a multibillion-dollar government bailout, banks are still feeling the effects of the subprime-lending crisis that peaked last year and nearly buried the industry.”
3. Marcy Gordin – Associated Press
“Banks, meanwhile, have tightened their lending standards. U.S. bank lending last year posted its steepest drop since World War II, with the volume of loans falling $587.3 billion, or 7.5 percent, from 2008, the FDIC reported recently.”
4. L.A. Times – Sharon Bernstein
“Data from the Small Business Administration show that despite an uptick toward the end of the year, banks in 2009 made only a third as many SBA-backed loans as they did in 2007.
Even though President Obama has asked Congress to provide $30 billion for banks to lend to small businesses, experts and many in the banking industry shake their heads in doubt.”
5. Darrell A. Hughes – Wall Street Journal.
“The U.S. Treasury Department is concerned the steady pace of bank failures could keep many small businesses from gaining access to new credit as the economy rebounds and companies seek to expand.”
Though the state of bank lending may not be where small business owners wish, there are other options, such as the merchant cash advance, allowing merchants to get up to $500,000 for their businesses, simply by meeting a few simple requirements. Get a free online quote here.
Some Disturbing News about Bank Lending to Small Businesses
As the economy fell into a recession, bank lending to small businesses dropped dramatically, forcing many small businesses to close their doors, especially due to their inability to get bank loans. Now, as the economy begins to recover, small business owners are beginning to have positive outlooks for their businesses, but according to some experts, the bank lending drought may not be improving anytime soon.
“The U.S. Treasury Department is concerned the steady pace of bank failures could keep many small businesses from gaining access to new credit as the economy rebounds and companies seek to expand,” wrote Darrell A. Hughes, for the Wall Street Journal. Hughes continued, quoting the Treasury’s chief economist, who said, “”We’ve been concerned that small businesses, which are particularly dependent on bank financing because they typically don’t access corporate bond markets, will face and have been facing difficulty getting credit.”
Based on this information, it may be necessary for small business owners to take advantage of alternative business funding methods. Merchant cash advance lenders, for example, advance small business owners up to $500,000 based on their monthly credit card sales. Therefore, they do not impose the requirements that the bank does such as excellent credit and collateral.
Some Discouraging Bank Lending Facts (Source: Wall Street Journal)
- Since the beginning of 2008, 192 banks have failed, with 27 coming so far this year.
- Total lending by U.S. banks fell 7.4%, the steepest drop since 1942.
- According to Raj Date, executive director of Cambridge Winter Center for Financial Institutions Policy, there will be a lending shortfall for small businesses of as much as $250 billion to $500 billion as the economy recovers.
- Date projected small businesses will likely begin feeling the crunch by mid-year, and it will last for the next two or three years.
Some Encouraging Merchant Cash Advance Facts
- Merchants can get up to $500,000 in unsecured small business funds
- Minimal requirements make it easier for small business owners to qualify
- Flexible repayment procedures allow repayments to go with the follow of business
- Accounts can be funded in as little as seven business days
A Paradigm Shift in Business Funding
Even after bank bailouts, small businesses are still having difficulties getting loans from banks. Perhaps it is time for small business owners to step away from the past and focus on newer, more innovative and promising methods of business funding.
The Forbes commentary section recently featured an article about technology’s biggest moments. Though the article focuses on technology, the ideas can very well be paralleled to the status of business funding in the United States.
Writer, John Jordan argues that as a society, we tend not to recognize that the biggest technological advances are happening, even when we are in the midst of them. He emphasizes this by asking questions like “Do you remember your first internet purchase?” “…text message?” And by pointing out that even as USB sticks overtook disks and digital cameras demolished film, to many it didn’t seem like such a movement when it was actually taking place.
This could be the exact case when it comes to traditional bank business loans. Right now, small business owners and the media are focusing on the fact that bank loans have become almost impossible to attain. However, the bigger story may be that alternative and modern methods of business financing, such as the merchant cash advance, are becoming (or will eventually become) the norm.
As a small business owner, it may be a better option to shift your focus from the woes of being unable to secure bank funding and instead, dig deeper into researching alternative business funding methods that are feasible for your business, as these may be the funding methods that your business will regularly use in the near future.
New Plan to Increase Bank Lending: Will it Work?
The Small Business Administration is set to put a new plan in action, in attempt to boost bank lending to small businesses.
Through this plan, the SBA will guarantee up to $3 billion in pools of banks’ 504 loans sold into the secondary market, according to Business Week. This is in an effort to relieve banks’ fears of borrower defaults.
The 504 loan program is designed for small business owners who want to acquire real estate or equipment for expansion or modernization. Therefore, it is hoped that focusing on this program will allow small business owners to expand their businesses and create more jobs. Still, there are a couple of setbacks and concerns regarding the plan, according to the Business Week article, making it necessary for small business owners to continue to keep an open mind to bank loan alternatives such as the merchant cash advance.
- Even an 80% guarantee may not be enough to lure lenders back.
- “…TALF’s [Term Asset-Backed Securities Loan Facility] expiration could slacken demand and reduce the premium lenders get for their SBA loans, which in turn means less incentive for banks to make the loans to businesses.
Expansion is one of the top uses of the merchant cash advance and with the opportunity to receive up to $500,000 in business funds, small business owners can choose to expand their businesses however they choose. Whether you want to open an additional location or increase the products and/or services that your business offers, you have an opportunity to create jobs and rebuild the economy with a merchant cash advance.
The Conundrum of Bank Lending
Ever been asked the question, “Which came first, the chicken or the egg?” For some, this question sends the brain into an endless spiral of confusion. The current state of bank lending can have the same affect on a small business owner in desperate need of business cash.
“Banks are more likely to approve a credit line to a business when it doesn’t need the funds compared to one that is financially strapped,” wrote small business credit blogger, Marco Carbajo. In his blog post titled, “Small Business Credit Lines: Do you know what Banks are looking for?” Carbajo advises small business owners to apply for business lines of credit when they don’t need it, as their chances of being approved will be higher. But what about the countless small business owners that need cash now, and won’t get to a point where their businesses are financially stable unless they can somehow get their hands on business funds?
Fortunately, unlike many of life’s other mysteries, there is a real solution to this small business financing problem – the merchant cash advance. The merchant cash advance was specifically designed for small business owners that need business cash, but can’t get it through banks, simply because they need it. Merchant Resources International is devoted to providing business funds to merchants who need it. Qualified applicants can receive up to $500,000 in unsecured business and they can use the funds without restrictions.
Small business owners shouldn’t be penalized for needing business funds. If you need cash for your business let us give you a free quote today and possibly up to $500,000 for your business in as little as seven business days.
Bank Lending Still Down
Despite constant efforts to increase small business access to bank funds, small business lending has continued to decline, according to CNN Money.
“The 22 banks that got the most help from the Treasury’s bailout programs cut their small business loan balances by a collective $10.5 billion over the past six months,” wrote Catherine Clifford. Also according to the article, Wells Fargo saw the biggest lending drop.
So what do all of these statistics, numbers and percentages mean? Small business owners still don’t have the access to bank loans and many of their businesses are still struggling.
Fortunately, the bank is not the only place for small business owners to turn to for business funds. Many merchants have already taken advantage of these options. Still, if more merchants were aware of bank loan alternatives and willing to use them, more businesses could be saved.
Yes, the bank is the traditional method of small business financing, but is an ineffective and possibly detrimental act worth continuing, simply for the sake of tradition? For centuries, writers, philosophers and many other prominent figures have attempted to reveal the futility of empty, misconstrued traditions. American poet T.S. Eliot said, “A tradition without intelligence is not worth having.” Novelist, William Somerset Maugham said, “Tradition is a guide, not a jailer.” And musician Gregg Hawkes said, “Traditions exist so we can go beyond them.”
The small business owners who have put tradition aside, realizing that using an alternative business funding method, such as a business cash advance is in the best interests of their businesses, have received up to $500,000 in unsecured business funds, a flexible and easy repayment method and continued access to business cash, with the opportunity to renew their business cash advances every three to four months.
Complete an online application today.
Will Traditional Lending Ever Improve?
“…the entrepreneurs who drive this part of the economy continue to complain that access to credit two years into the recession remains scarce,” writes Reuters’ Bryan Snyder, and despite constant news of an improving economy, sources everywhere are still speaking of the difficulties of securing small business loans. Snyder continues, quoting Todd McCracken, president of the National Small Business Association who said, “…it’s now that we see some signs of a potential recovery that we need credit the most. Without credit, the recovery is not going to happen.”
Though small business owners may still find that traditional lending is as tight as ever, alternative methods of business funding such as merchant cash advances are available and providers are attempting to make this business funding method even more readily available and useful for small business owners.
MRI, for example, has done this by creating a variety of programs that extend an opportunity for business funds, not only to the business owners with the lowest credit scores and monthly credit card processing rates, but also, to those with good to excellent credit scores and higher monthly credit card processing. These programs were developed in attempt to make sure that every small business owner can benefit from a merchant cash advance. Through MRI’s funding programs, riskier merchants get the chance to secure business funds when other lenders will have nothing to do with them, and merchants with solid credit scores and credit card sales are rewarded with the lowest industry rates and loan terms of up to one year.
There is a general hope that bank lending to small businesses will soon pick up, but in the mean time, small business owners should take advantage of merchant cash advance availability. Moreover, even when traditional lending does improve, small business owners can still use merchant cash advances in addition to bank loans or instead of them, when they are in need of fast, convenient business funds.
