Lovie Keesler asked 1 year ago
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It is ironical that those businesses that need funding the most face the toughest challenge in getting their hands on such funds as and when needed.
Consider these tips for getting small business funding that most experts recommend: Mortgage property and get a bank loan This is a good idea and recommended but the only drawback is that paperwork takes time and banks follow their norms. If money is required urgently, this may not be the best option. In any case, it is more than likely that a businessman has already got a bank loan. Non-traditional funding Non-traditional sources of funds are organizations that offer microloans but then they too have their norms and lengthy processes.
Economic development agencies These agencies do assist with loans and Investment grants but not all businessmen can meet their eligibility norms or wait for a long time to get money in their hands. Venture capital Venture capital is great, especially for startups, but their norms may be strict and Investment they may prefer investments in high return, mega projects instead of small businesses.
Delay is built into their mechanism. Friends, angel investors, Business grants bring in a new owner Friends may not always be forthcoming. If a business is in difficulties even the best friend will prefer to stay away. New investors will likewise consider present situation and future potential.
Bringing in new partners means losing control of the business, which an owner may not wish to do. Merchant cash advances Despite all the negatives said about this source of small business funding, it is still the best. Often a last resort, it should be the first.
Detractors warn against falling into a debt trap, the high cost of money and the high repayment amounts and inflexible approach of lenders. Small business owners must calculate the pros and cons, their capabilities and borrow only an amount that will help them meet immediate needs.
Just the fact that cash is available on demand with least hassles, least paperwork, no collateral and repayments tied to daily sales is not a reason to grab as much money as you can. That said, small business owners can treat MCA as their primary funding source for:
- Meeting temporary cash needs to pay employee salaries
- Pay vendors when their own cash flow has been interrupted
- Buy some small equipment that will help boost sales or reduce costs or produce more
- Launch advertising campaigns that will result in more sales and revenue, which will partly offset the amounts to be repaid.
Getting funds so easily does not mean a business owner can sit back and relax.
He has a liability and must have a concrete business plan to increase revenues and must actively implement it to generate more sales. Gaining business momentum is the key to success with MCA. Also, one must evaluate such offers and find out the factor rate.
Opt for the lowest factor rate and an understanding lender who will be ready to reschedule payment or be flexible enough in customizing packages to suit a business. Know more: