How To Get A Small Business Cash Advance

How To Get a Small Business Cash Advance

Bank Said No? How To Get A Small Business Cash Advance

Getting a small business off of the ground and keeping it afloat is not a cheap feat. A small business owner needs to know ahead of time that at some point, he is not going to have the cash on hand that he needs. It could be start-up funds that you are running short on, or maybe you want to expand your inventory. Whatever the reason, having the know-how to get a small business cash advance will enable you to keep your small business moving forward, even when there’s no money in the bank.

Staying Prepared for When You Will Need a Small Business Cash Advance

Knowing that you are going to need to rely on a small business cash advance at some point, it is best that you are prepared to apply for one. Even though alternative lenders do not have the same strict guidelines that a bank does, there are still ways in which you can make your business look less risky, and increase your odds of getting a cash advance for your small business without having to pay higher rates and fees.

  • Always ensure that you can show a steady income with your small business. Keep accurate financial statements, bank statements and tax returns on file to show how you are consistently making a profit. When there are decreases in the amount of money coming in, or a sudden increase in the money going out, have an explanation prepared for the fluctuation.
  • Never carry a debt that you cannot afford to pay back. Just like with personal and home loans, an alternative lender is going to look at your business debt to income ratio to make sure that you will be able to handle the terms of paying the business cash advance back. If they see that you are already strapped monthly by other loan commitments, they may consider you too high of a risk.
  • Always keep up with your monthly payments. This is more telling to an alternative lender than your personal credit score is. They want to see that despite ripples in your past credit history, you are now able to meet all of your monthly financial obligations.
  • Keep updating your business plan in order to impress a potential financier. If you are staying on top of your business and looking at viable means of increasing your profits, an alternative lender will be encouraged by your forward thinking. When it does come time to apply for a small business cash advance, you can quickly add how the funding will help you to meet your goals.

The need for a small business cash advance can come up suddenly. By having anticipated that and taking steps to make your business look great on paper, you are increasing your chances of getting a quick approval.

Who Does the Small Business Owner Turn To When They Need a Business Cash Advance?

Not too long ago, a small business owner had two options when they needed a quick influx of cash for their business. They could go into personal debt to fund it, or they could ask a bank for a small business loan. Both of these options took weeks (at least) to fulfill the need, and only if you met certain stringent requirements. Then the situation got worse for the small business owner.
After the financial crisis, banks became even more reluctant to extend credit to small business owners, secured or not. This caused the eruption of a whole new industry of alternative lenders who were able to jump to the rescue of struggling small businesses. As a result, you now more options than ever before if you need a small business cash advance.

Before You Begin Filling Out Applications for a Small Business Cash Advance

As a result of the growing number of alternative lending solutions available for a small business, you are going to want to make sure that you are looking into those which will benefit you the most. Start by asking yourself the following questions:

  • How much money do you need? Do the research first and try and get as close to the exact cost as you can, even getting quotes if possible. This could help you when applying for the small business cash advance.
  • How quickly do you need the money? The faster the money lending service is, the higher the rates and fees are likely to be. Unless it is an emergency, stay away from lenders who offer a cash advance the next day.
  • What do you need the money for? This is an important question that the lender may ask you. Be prepared with a detailed business plan that includes how the money is going to be able to increase your business profits.
  • Do you have collateral to secure the cash advance? Inventory, unpaid invoices or expensive equipment may all be used to help secure a business cash advance for a lesser interest rate.

What types of terms could you afford to meet? Looking only at your current profit margin, how much can you realistically afford to pay each month in order to pay back the cash advance?Your answers to these questions is going to help you figure out what type of small business cash advance you should be considering. Some of the options available include:

  • A merchant cash advance – This is where a credit card merchant will extend a business cash advance and take their repayments from your daily credit card sales.
  • Factor funding – Factor funding is only an option if you have a high amount of unpaid invoices that can be used as collateral for the cash advance.
  • Equipment leasing – A good solution if your need is to buy new equipment for your small business.

With the foresight to prepare for the inevitable need for cash, you are going to have a better chance at securing a small business cash advance with an alternative lender then if you wait until the last minute. Now when the time comes to expand your small business, you just need to choose the right lender with the right type of loan.