Most small businesses find it very easy to get business cash loans and even those who have poor credit scores. While this method does not apply to bank loans, these are the quick guide to the requirements of private lenders, and as you know, private lenders are amongst the leading funders at this time.
Most business owners who are looking for funding to run their businesses smoothly and are unaware of the current requirements and developments in the financial sector visit their local banks. This (bank loan) is the way people believe a loan is to be obtained. However, banks are not very enthusiastic about funding small business, especially when starting up as an entrepreneur and as a result, a whole new industry has sprung up to meet the demand of the business.
Private lenders often fill the gap between businesses and banks in terms of advance loans. There is the very large segment of small businesses that are stuck in the middle of these developments, they 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 and some other EU countries.
The services provided by private lenders
Private lenders provide some funding 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 for businesses, and small business owners can work with the lenders to set the method that most suits their requirements.
The application process to apply for a business cash advance is simply straight, and quick, with the private funder, generally requiring some basic information, and a lot less than those of banks. The basic information required by private lenders to provide an MCA for the businesses is as mentioned here.
1. The age of the business - How old the business is
2. Gross income - The gross monthly sale of the business
3. The business needs - How much they require
4. Purpose of the funds, the borrower has to state categorically if the MCA is for the working capital, business expansion, purchasing equipment, purchasing inventory etc.
5. Formal declaration 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 accurately. The main difference between an application for an MCA and bank loans is the fact that banks require detailed information related to financial statements of the business. Private lenders basically need a broad picture of the ground realities of the business applying for the loan. Unlike banks, MCA does not base all decisions on the financial statements of the small businesses.
Another point that could make a difference is that, while banks and private lenders may have a different way of looking at things, private lenders do take care of the overall realities of the small businesses. However, 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 sole determining factor for an MCA. These loans are unsecured loans and as a result collateral and security are not really required.
Since credit scores, collateral and securities are not holding back small businesses, the possibility of getting funded is higher. These requirements are the basic weak areas of most small businesses, which hamper their ability to get funded by large financial institutions. Obviously, when these weak areas are removed from between a small business owner and the funding they seek, the process becomes a lot smoother and easier for them.
Collateral is something that most small business owners find difficult to show at the start. Typically, only with a private lender can a small business owner expect to receive a business cash advance with bad credit.
Another great feature of MCA 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 hours and in some cases, 72 hours from the time they submit a complete application. Although some application time frame would be a week or two. Banks, on the other hand, are in no particular hurry to provide business funding to the businesses, and a realistic time frame would be a couple of months to receive the money when approved.
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