Tim Roach, Negosentro | A small business needs great ideas, strong leadership and good old-fashioned hard work to be successful, among many other elements. Although you certainly are capable of providing those essentials yourself, you will also need financing and funding to get your idea off the ground — providing your small business with the resources needed to become established in the marketplace. Even once your small business carves a niche in the market, you’ll more than likely need to find more financing to help your business expand or stay ahead of your financial obligations. There’s a lot you put into your small business, but there’s more that it will need. That’s why it’s crucial for small business owners and entrepreneurs to understand the ins and outs of small business financing.
For example, one of the most important questions small business owners need to ask themselves is whether they should seek financing through a traditional source such as a bank or an alternative source such as merchant cash advances. Traditional financing sources tend to be extremely risk-averse. What’s more, they can take weeks to make funding available, even after approval. Alternative sources such as merchant cash advances, however, assume much of the risk and provide capital with relatively quick turnarounds.
If you choose to seek financing through a traditional lender, it’s important to keep your credit history clean and maintain a high credit score. Being able to answer questions such as, “How does your business make money?” and “What are your business’s necessary costs?” also is essential for securing traditional financing. In the case of alternative funding such as merchant cash advances, you’ll need to be sure you have a good history of paying down credit card debts for your business as well as good indicators of your business’s projected future sales.
The following guide details some of the differences between traditional small business financing and merchant cash advances, as well as what small businesses can expect with each option. This should help you determine which option is best for your business’s needs.
Financing was created by Lendr
Author bio: Tim Roach is Co-Founder of Lendr, a provider of merchant cash advances for small to midsize businesses. Roach holds a B.S. in Finance from Linfield College, and served in the United States Navy at Seal Team One. Before joining Lendr, Roach founded Oak Street Trading, a proprietary trading firm, in 2002.