The Upside of Non-Bank Lending (the downside of Loans)

Businesses must constantly expand, upgrade their equipment and facilities, hire new staff, and engage in other business operations if they want to stay ahead in the market place. Of course, none of these things are cheap, and often small businesses find themselves strapped for cash. Even if your company or business is profitable, it can take a long time to save up enough money to fund expansions and investments on your own.

Many businesses end up turning to loans from banks. Problem is, bank loans often carry high interest rates, and inflexible payment plans. Given the inherently risky nature of business, banks have to charge high interest rates to account for the risks. Meanwhile, banks want their money paid back on a very specific schedule. Miss a payment? It can hurt your credit. Miss multiple payments? Don’t be surprised if you’re hauled into court. This will make it more difficult for you to get loans in the future.

Given how inflexible bank loan payments are they can become a major burden for any company, and especially for small businesses. Suffer one or two months of slow sales? Next thing you know, your business could be struggling, and potentially at risk. Luckily, bank loans are not the only option for businesses.

Another option is to take out a cash advance. Notice how there’s no “loan” in the term? While cash advances are sometimes confused as loans, they are actually different in subtle, but extremely important ways. When you take out a cash advance, you are essentially selling a chunk of your future earnings in exchange for cash now. Then, when customers make purchases, the company that fronted you the cash advance will take a percentage of the sales.

Poor sales? No worries. Because the payments are based on percents, they are inherently flexible. This means that if sales are slow for a month, you won’t be buried in debt, but instead your payment will drop. Thus, instead of being a burden, a cash advance can be flexible and adjust to your business and its needs.

What can you use a cash advance for? Pretty much anything. Remember, your business is your business. Be wary of any lender or financial services firm that tries to get too involved in your business and your decisions. With a cash advance, you can avoid these hassles and remain in charge of your own company. This means you can run your business your way.

When you take out a loan, you’ll often have to present a very detailed plan for how you will spend the money, and you’ll generally have to abide by that plan. There’s nothing wrong with planning, of course, but as most business owners will tell you, markets are fast changing. The plans you made last month may no longer be relevant next month. That’s simply the nature of the market. Luckily, with a cash advance, you will be able to spend your money as you see fit.

These are just some of the benefits of cash advances. Want to learn more? Get in touch or fill out an application with Berkman Financial today!

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