Funding Small Businesses: The Difficulties and Options

In any business, financial capital is needed to keep things moving forward. The cash flow is the main thing that keeps a business running. With a weak cash flow, a business cannot continue to run efficiently. To keep cash flow strong, especially in times of economic struggle, businesses need the help of business funding sources. When it comes to business funding sources and small-time businesses, getting a loan approved can be quite difficult. There are a number of reasons why getting loans, specifically from the bank, approved is so difficult, although there are other ways to cope up with it.

The Difficulty of Securing a Business Loan from the Bank

With the recession which has engulfed the world, banks have become very distrustful of borrowers and so, they have become very strict in their regulations, regarding doling out business loans. They easily reject business loan proposals which do not match up to the high standard requirements they put up and in cases where all the requirements are met, they could still choose not to approve the request of a business owner because of the lack of a good and trusted relationship with the bank. It would be even more so difficult to get a same day loan as the approval process for a business loan can be long and cumbersome. It may so happen that the loan is approved but it may be far less than what was asked for initially. After that, there is the problem of the long processing period the bank has to go through, before the business owner actually receives the business funding.

The Merchant Cash Advance as an Alternative Source of Funding

With the difficulties in securing a business loan from the bank, a great number of businesses have to look to other sources, for funding their businesses. Fortunately, there are other ways for people to get funding that aren’t as strict as the stipulations, provided by the bank. A common alternative source for finance for small businesses is merchant cash advance. With merchant cash advance, processing a loan is quite easy. Merchant cash advance isn’t really considered a loan as it is more of a cash advance. The money is paid back slowly through credit card on a monthly basis until the full amount is paid back with interest. This source of funding is extremely helpful, especially for businesses, which are in urgent need for funding. The only real requirement for one to avail of merchant cash advance is to have a major credit card like Master Card or Visa, since payment to the lender is paid back through the credit card.

 Credit Cards: The Last Resort

When all sources of funding have been tried, the last resort would be to use your own credit card to fund business operations. This can be a very costly thing to do and should only be done when there is really no other choice and when you really need the money for the business. A business owner should take note of the high interest rate if the business owner is going to use his or her credit card, for funding the business.

Running a business, even a small business can sometimes get very messy, particularly when it comes to keeping the cash flowing. With a better understanding of business funding, business owners can better protect their businesses from crumbling.

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