Lending has been around for several thousand years and this is no exaggeration. Clear evidence of that can be found in history and any religious books are checked. There is also evidence that will show that bank loans are a new method. Maybe not in the business owner’s lifetime, but in history, it is a young method. Because most small business owners don’t know this, they often times assume that this is the way to go when it comes to funding their business. Until just recently, banks were the only ones advertising these types of loans. At least banks were the loudest voice in terms of lending, but non bank lending options are growing ever more popular as time marches on because of the many reasons one may find convincing to go this route.
One of the most important methods is MCA’s: MCA stands for Merchant Cash Advance. This is a flexible business loan that allows the business owner to borrow against their collateral or against their future profits. Here’s the breakdown of how it works: The business owner completes the convenient online application, the lender makes contact and interviews the business owner. There will be several short qualifying questions: What has the business owner got in the form of collateral. This can go a couple of ways; personal which they’ll want to avoid and business. Business collateral can be equipment that the business uses.
If the business can’t go that route then the MCA lender will calculate what the future profits will be for the borrower. So, how can they tell what the future sales will be? There are several ways to predict future profits. The bottom line is this: Will the borrower be using the loan on a business opportunity that will guarantee more profit? Are they heading into the busy season and are guaranteed more profit? And lastly, can they provide 2 years of profit to analyze?
Below are other awesome reasons why the MCA loan is the best types of non bank lending you can choose.
- They use a short, sweet and to the point application process: Banks are notorious for utilizing the long-form application process. They understandably will want to know everything they can, from how the applicant wishes to use the loan to what they own. This is so they can attach the applicant’s assets in case of default. This can be scary, especially to a new business owner. Typical non bank lending will only ask about the elements they need to secure the loan; the rest is irrelevant.
- No Quarterly Audits Necessary: It is not typical for these types of loans to require a quarterly audit as a bank will. This means less stress on the business owner. It also means they can use it with confidence.
- They offer speed and convenience: Today there are ways to get a loan online without a ton of paperwork. Typically, there will be a short form of relevant questions and then a lending agent will contact you. This means the owner gets an answer quickly and should not have to wait weeks. This is stressful and unwarranted. Getting a non bank lending is short, sweet and to the point.
- One Point of Contact: Once you develop a solid relationship with the lender of choice, they are the only person they would typically speak to. At the very least, they’ll have to speak to a staff member if they lending officer is not available, but they’re not typically patched off through 100 strangers. This gives the business owner a secure feeling. It’s much more intimate than a large banking firm. Just because the bank itself may be warm and friendly and the owner may know the teller for 10 years doesn’t mean they won’t have their loan dealt with by a call center somewhere else. This can be very agitating to a business owner.
- They are fantastic for applicants with poor credit: Each non bank lending firm will vary on what they consider a fair risk regarding bad credit. But this type of loan is the best for those with a credit score that is around 600 or maybe a bit less. This is because if the business owner has $10,000 in monthly credit card sales and has been established for between 6 and 12 months, they can be eligible.
Deciding to go with a MCA lending solution that is not from a bank will prove to be a much-needed break for small business owners who want expansion and growth without the hurdles.