Getting a business cash advance is simple and easy for most small businesses, and even those who have poor credit scores. While this does not apply to bank loans, these are the requirements of private lenders, and private lenders are amongst the leading funders at this time.
Most business owners who are looking for funding and are unaware of the current requirements and developments of the financial sector, visit their local bank. This is the way people believe a loan is to be obtained, via the bank. However, banks are not very enthusiastic about funding small business, and as a result a whole new industry has cropped up to meet the demand.
Private lenders often fill the gap between businesses and banks. There is the very large segment of small businesses that are stuck in the middle, who don’t qualify for bank loans and yet require financing. Private lenders fill this gap providing many of them with the much required business cash advance in the USA.
The services provided by private lenders
The funding that private lenders provide is typically known as MCA or merchant cash advance loans. These kinds of loans are short term loans that are for a maximum duration of 12 months. The repayment options are easy and flexible, and small business owners can work with the funder to set the method that most suits their requirements.
The application process to apply for a business cash advance is simple and quick, with the private funder generally requiring basic information, and a lot less than those of banks. The basic information required by private lenders to provide an MCA are as mentioned here.
1. How old the business is
2. The gross monthly sale of the business
3. How much they require
4. Purpose of the funds i.e. working capital, business expansion, purchasing inventory, purchasing equipment etc.
5. If the business owner has other loans and if he or she is in bankruptcy.
These are some of the basic types of questions that a small business owner who is applying for an MCA would need to answer. The outstanding difference between an application for an MCA and bank loans is the fact that banks require detailed information related to financial statements. Private lenders basically need a broad picture of the ground realities of the business applying for the loan. Unlike banks all decisions are not based on the statements of the small business.
While banks and private lenders may have a different way of looking at things, private lenders do take care to ensure the ground realities of the small business are as they should be. Banks rely heavily on financial statements when reaching a conclusion related to funding a business.
Features of the MCA loan application process
While it is possible that you will be asked about your credit score even when you are going to apply for private funding. The credit score is not a determining factor for an MCA. These loans are unsecured loans and as a result collateral and security are not required as well.
When credit scores, collateral and securities are not holding back small businesses, the possibility of getting funded is a lot higher. These are the basic weak areas of most small businesses, which hamper their ability to get funded by in large. When these weak areas are removed from between a small business owner and the funding they seek, the process becomes a lot smoother for them.
Collateral is something that most small business owners find difficult to show. Typically, only with a private lender can a small business owner expect to receive a business cash advance with bad credit.
Another great feature is the fact that small business owners can receive the funding they require very quickly as well. The quickest a business owner can receive the money in their business account is 48 to 72 hours, from the time they submit a complete application. At the latest this time frame would be a week or two. Banks on the other hand are in no particular hurry to provide business funding, and a realistic time frame would be a couple of months to receive the money.