Why you Shouldn’t Fear A Small Business Loan

Small Business Loan

When you say the word small business loan, people have a tendency to shake in their business shoes. This is especially true when you mention a Merchant Cash Advance or {MCA}. But, we want to clear up one very important thing right out of the gate: A MCA is not a loan. Yes, you can breathe a sigh of relief now, relax and we’ll educate you about this most valuable small business tool.

Why is a MCA a valuable small business tool?

First, just to further clarify, we said that a MCA was not a loan but we call it a small business loan tool. This explanation will serve to highlight the benefits of a MCA in comparison with a traditional business loan.

We refer to a MCA as a small business lending tool because it’s a unique solution to the same issues a traditional secured bank loan would solve without the stress.

Let’s compare side by side the MCA process and a traditional secured bank loan.

For example: If a small business secures a traditional bank loan they would have to subscribe to several factors.

  1.    They may have to go as far as showing a valid business plan plus at least two years worth of profit and loss, and that’s the tip of the iceberg.
  2.    They may have to state exactly what they are using it for and won’t have the option to change. That’s something that may change for a small business owner without notice. Why? Because if the business is in its first three years it’s more vulnerable and in its fledgling stages. Then, they have to pay back the small business loan without using it for the initial intended purpose.

The most important point is that it’s a loan and that means you have to pay it back within your agreed upon time and amount regardless of how good or bad business has been.

Statistically, banks view small businesses as a high risk for loans due to a higher failure rate. A well-established company has enough financial data for the bank to scrutinize. The banks will deal with more established small businesses for this reason. Fledgling companies, {any company under two years old} may not get an interview for a small business loan due to an insufficient amount of cumulative data.

When you secure a MCA in comparison, this is what you’ll experience:

  •    Since a MCA is not technically a loan, you will be paying it back by surrendering a percentage of your sales going forward. This means no struggle to find a way to pay it back. This means more time spent working in your business with less negative distraction.
  •    You’ll be able to take out the loan multiple times in amounts you can afford.  A simple analysis of what your ROI has been for your marketing efforts will tell you what you’re most likely to pull in as profit. A MCA will cover the amount that you need and if you need to reapply, depending on the company providing the MCA small business loan, you can pace yourself accordingly.

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