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Article Directory :: Finance & Investment Articles
There are different types of financing methods a business owner can choose from when faced with financial problems. Some entrepreneurs apply for bank loans. But what if you are in need of fast cash? Applying for a loan can take a little time to get approved. Are there any other options?
Easy Cash Loans for Small Businesses
When running a business, there would be times that the budget you have won't be enough. Let us say you have an old customer that placed a large order. Since you have just started your business, you don't have enough stocks or materials to produce a large bulk. Is this reason enough to refuse your customer?
When this happens, you will lose a lot of things. One, your customer will not be happy with your refusal. Your customer will definitely be disappointed. This will give you a bad image as an entrepreneur.
Two, you will lose a sale. As a result, this customer may not do future transactions with you anymore. Remember, this the customer might also tell others about this failed transaction. Gaining a customer?s trust and confidence is one of your goals as a business owner.
What are cash advance loans?
Cash advance loans are viable options for short term financing demands. It is secured by submitting invoices from the borrower's credit card transactions. While a traditional loan for small businesses need 30 days to process, instant cash is what a cash advance loan promises in exchange for a small fee.
Normally, a lender offers up to 80% of the amount of invoices submitted. If your customer pays the credit card bill, the rest of your balance will be given to you by your advance loan lender. But if your customer fails to pay on time, the remaining 20% of your invoices will go to your lender as penalty charge.
Accounts Receivables Factoring
If you don?t accept credit card as a form of payment, there is also another short term financing that you can apply for. It is called accounts receivables factoring. This kind of financing methods is almost similar to cash advance loans. Your regular invoices (non-credit card transactions) are the ones used as security for this kind of loan.
It is your lender that will notify your customer that the collection of debts has been turned over to the factoring company once the application has been approved. If your customer is not aware of this type of arrangement, the factoring company will end him/her a detailed explanation on how account receivables factoring is done.
Keep in mind that cash advance loans are only advisable to use for short term needs. If you are in need of a huge amount for, let us say expansion of your company or you need to invest on something for the company, then a traditional loan is still recommended.
Irish Taylor is a business loan consultant with Startup Business Loans and has been providing consumers and business owners with startup business financing since 1992. For years she has helped people with credit and loan problems especially pertaining to new business loans, SBA loans and startup business loan.
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