Over Two Thirds of Small Businesses Unaware of Merchant Cash Advance Loans and Alternative Lending Solutions
Small business owners seeking loans and finance solutions to take advantage of new opportunities – or just keep going during difficult times – are approaching banks and traditional lenders for much needed funding. However, traditional lenders have been exercising great caution in recent years due to the poor economic climate, and they are less willing to take risks. As a result, the banks are turning down the majority of loan applications made by small business owners.
Tougher lending restrictions and a long winded, complicated and paperwork-heavy application process mean small business owners are having to invest a great deal of time completing lengthy application processes, which can take involve many months of negotiations and mountains of paperwork, only for the loan application to denied many months down the line.
The credit scoring system can be unfair for business owners who have experienced financial difficulties in the past, defaulted on previous loans or have not been in business long enough and can therefore not provide the years of accounts that the big banks demand. For start up businesses, obtaining finance can be all but impossible with large and small banks both unwilling to take risks.
In many cases it is not the consumer credit score or credit history that is the problem. Big banks as well as smaller lenders often refuse to issue loans because the loan amount is too low to make it worthwhile.
In recent years there has been an explosion in the numbers of alternative lenders able to provide finance solutions for small businesses and they are making up for the shortfall. These lending institutions provide a wide range of different financing options to small business owners such as merchant cash advance loans, business cash advances and even bad credit business loans.
Uptake of these alternative merchant account cash advance loans has been considerable in recent years, yet it appears that few small business owners are aware of the options available, let alone the benefits of these new methods of obtaining business finance.
A recent study conducted by one alternative lending institution based in New Jersey suggests that up to 70% of business owners are unaware of the range of financing options. It has been suggested that the majority of small business owners believe banks offer the only workable solution and that it is not possible to obtain viable small business loans from any other sources.
It would appear that many small business owners are approaching the banks and speaking to a loan officer only to be discouraged from making an application for finance in the belief that at the end of the long application process the loan request will ultimately be denied. Many business owners have even shelved plans to expand for fear of stretching cash reserves too far and being unable to pay essential bills and staff costs. However, a merchant account cash advance or alternative finance option could well offer not only a way to secure essential finance, but it could also be the best solution.
Alternative lenders are able to provide incredibly quick decisions on merchant cash advance loans and alternative business loans, require only a quick and simple application process and can even initiate the transfer of funds within a couple of days from first contact. Instead of paying back the cash on a monthly basis over a number of years, payment can be taken as a percentage of daily sales.
The terms of merchant account cash advance loans and other financing solutions may not be right for every business, but it is clear that a great deal of small business owners could be benefiting from the services offered by the alternative lenders and that a merchant account cash advance could be the ideal solution to enable growth, expansion into new markets and give small businesses the kick start they need.