In most situations, funding is the only thing keeping a great business idea from making it to the commercial world. Since banks typically only lend you money that you already have, they're the last place you want to go for start-up capital. And that's why merchant cash advances are gaining popularity as a viable funding option.
Banks Lend You Money That You Already Have
AllBusiness wrote an expose on the probability of getting funding through traditional lending means as opposed to working the merchant cash angle. With Wall Street in peril and a traditional business loan tougher to get than ever, banks have a tight string on the money purse that many small business hopefuls need to break new ground.
Says AllBusiness, ‘…when major unexpected expenses crop up or--as we're seeing today--the economy grinds to a screeching halt, owners can find themselves struggling to get their hands on the working capital they need to keep their businesses afloat.’ The bottom line? The small business loan isn’t for small businesses anymore.
Loans for Business Before the First Sale is Made
Enter the merchant cash advance. Well, the concept has actually been around for years. But due to proprietor unknowing and a general resistance against new ideas, small businesses are just now seeing the power of potential sales as a way to capture start-up capital. The major difference between a traditional bank loan and this type of arrangement is that cash advance providers buy a fixed share of a business' future credit card transactions.
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