Small business has always rewarded out-of-the-box thinkers; particularly those who do so with respect to finances. In that spirit, entrepreneurs looking to hurdle a potential trap should think twice before applying for secured and unsecured business loans. Both types of business funding have the potential to put your venture in a hole immediately. Here’s why.
The Pitfalls of Borrowing Money
Yahoo! Small Business offers a comprehensive breakdown of the advantages and disadvantages of securing business financing. As you might expect, the latter outweighs the former in several unique categories. Small business loans become an immediate and substantial business expense. Collateral and annual percentage rates cut into profits and lengthen the amount of time it takes for a venture to become profitable.
The Myth of the Standard Loan
According to Business Week, there’s no such thing as a standard business loan. A collection of variables and contingents can provide a stark contrast of one loan to the next. That’s why it’s crucial to meticulously examine each aspect of a potential loan to determine what they will mean toy our business.
MCAs Let You Avoid Small Business Loans
Vendorseek offers an alternative to small business loans: the merchant cash advance. MCA vendors offer up-front cash for a percentage of future credit card sales. The benefits should be immediately evident. It’s not a loan, so there are no minimum monthly payments to make or threats of forfeited collateral. The pressure is off and small businesses are left to concentrate on accessing new markets.
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