How to Access Small Business Finance

America is a land of entrepreneurs. It is relatively to obtain finance, even for startups. Existing business owners find it easier to get finance from various sources such as secured and unsecured funding. Consider a case where a business owner needs funds. What are the options open to him?

Divest capital

An owner may have majority stake in the business. He could invite others to invest and bring in more funds. He stands the risk of losing control of his business and the interference of a business partner or stakeholder becomes permanent.

Angel equity

If a business owner is in touch with a high net worth individual, he can approach them for funding. Since it would be a sort of personal loan or investment, borrower has full control of business but terms must be negotiated.

Banks, Local and state economic development organizations

The plus point is that these institutions charge a low rate of interest. The downside is that their processes are long and complicated and entails delays. When urgent funds are required these sources of small business finance do not prove to be helpful.

Get long term credit from vendors and advance from customers

It is easier said than done. In business segments like retail and restaurants the question of customers giving any advance simply does not arise. Vendors too cannot be expected to extend unlimited credit.

Friends and family

This seems the best but friends and family cannot always be relied upon to have the amount of money required by a business owner.

Merchant Cash Advance (Unsecured Loan)

One of the best ways to get small business finance, no questions asked, is to opt for merchant cash advance. As a source of small business funding, MCA is unrivalled due to several advantages:

  • Positive credit history is not a must
  • Minimum documentation
  • Fastest approval and disbursal of funds in as little as 3 days
  • Repayments tied to daily turnover which means a reduced burden.
  • No mortgage of property is necessary which means should a business go bust, the owner does not have to sell property. MCA lenders ask for personal guarantee and they can always reschedule repayments because their interest is to help businesses survive and grow.

MCA is available for just any purpose, even in cases where normal institutions would outright refuse to lend. A business owner may be faced with a cash crunch and cannot pay employees on time. He may have to pay vendors while his incoming payments are held up. He may wish to buy some equipment to increase production but he already has tapped all other sources of funding. He may wish to launch an advertising blitz campaign to take advantage of seasonal sales or take part in an exhibition. MCA provides oxygen for survival in the form of immediate injection of cash.

It could be a borrower’s undoing if he does not calculate his cash flow. However, if he gets his numbers right then this mode of small business funding could prove to be steroids for his growth.