The Secret For Small Business Loans Revealed In 4 Simple Steps

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    Working-capital loans for today’s retail businesses are increasingly difficult to come by. While there is much talk regarding helping “main street” in the media and politics, the the fact is that the most cost effective working capital for business is an SBA or Bank loan. Unfortunately, the restricted credit environment by which we find ourselves means a large proportion of these loans are not being approved for the retail businesses that need them most.

    This leaves many retailers within the unfortunate position of going with a merchant cash advance from their card processing company. These cash advances for working-capital will often be billed as “convenient” and “unsecured” ways for business people to get “quick cash”. The fact of the matter is, most cash advance companies do secure their loans via a UCC filing against the business. While it may not be in the owners personal credit, for many small retailers, having a UCC filing against their business just isn’t much different. It is a lien that’s placed on the business until the advance is repaid.

    What is often left out is that cash advance businesses are not regulated through the government as loans. This means they can be free to charge interest rates, or factor rates, of 50% or higher. Even on a short-term working-capital loan, this is an amazing quantity of interest. More often than not, since it is just not a true loan, the MCA company has the option of changing the rate at any time throughout the repayment process. These advances will often be seen as high upfront fees, and the requirement to switch payment processors and/or buy new equipment from the provider. They also may have high “holdback” or daily payment rates that represent a real burden for many businesses.

    For most cases the active commercial loan companies for this specialized form of commercial funding are limiting working-capital loans to businesses which are current within their debt payments and are showing a net profit (according to recent bank statements). If these two conditions are met, new commercial loans can frequently be obtained to refinance lines of credit and term loans that have been cancelled or recalled by many loan companies. For businesses not qualified for commercial financing using these two requirements, you can find alternative funding sources for example grow your business cash advance programs.

    Many small business owners also rely on personal lines of credit to finance several of their business operations. There have been many reports of widespread cancellations and reductions of these lending programs as well, especially those involving loan companies which have received a multi-billion dollar cash infusion from USA taxpayer money that was intended to facilitate the lending of money to businesses and consumers.

    Personal and business lines of credit have been eliminated in several cases by loan companies because of a reduced ability to pay by borrowers and deteriorating business conditions. As reported in the Working capital Journal, a high number of borrowers, on the contrary, had a fantastic payment history for many recent line of credit reductions or cancellations.

    On the other hand, you will discover banks willing to make working capital loans. The most significant examples are (for the most part, anyway) not banks that have received bailout funds. In general, these commercial loan companies have been willing to provide working-capital financing, either in the type of new business financing or refinancing lines of credit and term loans which have been recalled or cancelled by other loan companies.

    Since it basically indicates that bailout funds are already given (so far) to loan companies who primarily have a history of making bad loans (virtually all lenders receiving bailout funds to date), the lending activities described above are a serious concern to many observers. Currently, little attention has been given to lenders with a healthy balance sheet in federal attempts to get more funds in to the hands of consumers and businesses.

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